Emkay Tools (ETL)

FairStock Score: 28/100 — RISKY

Score breakdown: P/E: 2/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Profit growth of 22.17% outpaces sales growth of 14.74%, showing margin expansion.
• Latest quarter net profit of ₹24 Cr on ₹62 Cr sales translates to a strong 38.7% net margin.
• Promoter holding of 74.99% aligns management with minority shareholders.
• Piotroski F-Score of 6/9 indicates broadly sound financials.
• PEG of 1.07 suggests valuation is not excessive if the growth rate is maintained.

Concerns

• Missing book value, ROE and debt/equity data, with ROCE at 0.00%, makes financial health impossible to verify.
• FairStock Score of 31/100 labels the stock RISKY.
• P/E of 19.75 on a ₹966 Cr market cap with only ₹62 Cr quarterly sales offers little margin of safety.
• A 38.7% net margin in industrial products is likely unsustainable and may invite competition or normalize.

AI Analysis

As an investor, my first question is always: can I understand this business and trust the numbers? Emkay Tools leaves me troubled. The company is an industrial-products player with quarterly sales of ₹62 Cr and net profit of ₹24 Cr—a remarkably high 38.7% margin. Profit growth of 22.17% and sales growth of 14.74% tell me margins are expanding. But expansion of that magnitude in an industrial-products business is not normal. It could be a windfall, a price hike, or an accounting quirk; I need years of evidence, not one quarter. Worse, the most important measures of financial health are absent. There is no book value, no ROE, and no debt/equity ratio. ROCE is shown as 0.00%, which appears inconsistent with the quarterly profit. A business that earns ₹24 Cr on ₹62 Cr of sales should show some positive return on capital; a zero ROCE makes the data internally inconsistent. Ben Graham taught me to demand disclosure; without it, I cannot compute a margin of safety. The Piotroski score of 6/9 is passable, and promoter holding of 74.99% does align incentives, but high promoter ownership also leaves less public float and requires strong governance. At ₹940, the P/E is 19.75, implying about ₹49 Cr of trailing earnings. The PEG ratio of 1.07 says the growth is priced fairly only if 22% profit growth continues. With a dividend yield of just 0.28%, I am not being paid to wait. That is a big 'if' with FairStock labeling the stock 31/100 and risky. I would rather miss this opportunity than invest in a business I cannot value. The numbers are not big enough, the moat is not visible, and the data are not transparent. In Indian small caps, this is not the kind of cigar butt I want; it is a fast-growing stock with warning lights flashing. I will wait for more clarity.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer