Eureka Forbes (EUREKAFORB)

FairStock Score: 12/100 — RISKY

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

Key Financials

Strengths

• Nearly debt-free balance sheet with Debt/Equity of 0.02
• Promoter holding is high at 62.56%, aligning interests
• Piotroski F-Score of 7/9 suggests improving fundamentals
• Sales growth of 7.96% shows the business is expanding
• Profit growth of 32.34% indicates earnings momentum, albeit from a low base

Concerns

• Weak capital efficiency: ROE of 3.72% and ROCE of 5.04% are far below attractive levels
• Valuation is expensive: P/E of 47.10 and PEG of 2.34 with modest sales growth
• Latest quarter net profit of just ₹9 Cr on ₹645 Cr sales implies a very thin margin
• Zero dividend yield means shareholders get no immediate income while waiting

AI Analysis

Let's look at Eureka Forbes as a business, not a stock. The household appliance maker has a name Indian consumers know, and a clean balance sheet with debt/equity of just 0.02 is admirable. But a good business must earn decent returns without leverage. Here, return on equity is only 3.72% and return on capital employed is 5.04%—far below what a wonderful franchise should generate. Last quarter sales were ₹645 Cr but net profit was only ₹9 Cr, meaning a margin of under 2%. If this is an indication of normal earning power, the business is extremely thin. Yes, reported profit growth is 32.34%, and a Piotroski F-Score of 7/9 hints at improving operations. But starting from a weak base, percentage growth can deceive. At ₹505.75, the market capitalises the company at ₹9,202 Cr, which is 47.10 times earnings. A buyer is paying ₹2.18 for every ₹1 of book value while the company earns just 3.72% on that book. Graham would demand a margin of safety; I see little of it. There is also no dividend yield to compensate while waiting. The 52-week range of ₹403.20 to ₹668.30 shows volatility, and at the upper half of that range, sentiment is not in our favour. This is not a wonderful business at a fair price; it may be a mediocre earner at a demanding price. The debt-free nature and 62.56% promoter holding offer some downside protection, but low returns and a rich valuation leave no room for error. I would keep it under watch, but not commit capital.

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