Fractal Analyt. (FRACTAL)

FairStock Score: 24/100 — RISKY

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

Key Financials

Strengths

• Five-year revenue CAGR of 25.93% shows strong top-line growth
• Latest quarter sales of ₹1,559 Cr and annual sales growth of 19.86% indicate continued demand
• Low debt-to-equity of 0.21 provides financial cushion
• Positive free cash flow of ₹206 Cr supports operations and potential reinvestment
• ROCE of 12.05% shows reasonable capital efficiency

Concerns

• Profit growth is negative at -2.35%, while sales are growing, indicating margin pressure
• P/E of 76.14 and PEG of 3.83 imply an extremely expensive valuation with little safety margin
• Promoter holding of only 16.97% raises corporate governance and alignment concerns
• Piotroski F-Score of 4/9 suggests weak overall financial health

AI Analysis

When I evaluate Fractal Analyt, I first remind myself that price is what you pay, value is what you get. At ₹962, the market is asking me to pay 76 times earnings and 7.3 times book value for a business whose latest profit actually fell 2.35%. That is a steep price for any company, let alone one in the intensely competitive software consulting space. The revenue story is real: sales grew 19.86% last year, and five-year revenue CAGR is an impressive 25.93%. The latest quarter shows ₹1,559 Cr in sales and ₹71 Cr in net profit. But the disconnect between top-line growth and bottom-line decline worries me. A quality business must eventually convert revenue into shareholder earnings; so far, the profit engine is sputtering. The balance sheet is reasonably clean, with debt-to-equity of only 0.21 and free cash flow of ₹206 Cr. ROCE of 12.05% is respectable but not exceptional, especially for a stock trading at this valuation. Promoter holding of just 16.97% is a red flag in India; I want owners heavily aligned with minority shareholders. The Piotroski F-Score of 4/9 also signals weak financial health. This is a fast grower, but a fast grower at a PEG of 3.83 is dangerous. Graham would say the margin of safety is absent. I cannot pay today's price for a business whose profits are not yet matching its growth. It may become a wonderful investment if earnings catch up, but I would wait for a better price or clear proof of margin expansion.

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