G M Breweries (GMBREW)

FairStock Score: 59/100 — STEADY

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

Key Financials

Strengths

• Debt/Equity is just 0.03, giving a very strong balance sheet.
• ROE of 19.06% and ROCE of 18.13% show healthy capital efficiency.
• Promoter holding of 74.43% aligns management with minority shareholders.
• Sales growth of 21.89% and Piotroski F-Score of 7/9 indicate decent operational momentum.
• P/E of 13.93 and PEG of 0.25 are reasonable if current growth is sustainable.

Concerns

• Free cash flow is negative, so reported profits are not fully converting into cash.
• Profit growth of 91.22% is far above sales growth of 21.89%, suggesting an unsustainable margin peak.
• Dividend yield is only 0.75%, offering little cash return to minority shareholders.
• The 52-week range of ₹666.05 to ₹1,328.80 shows high price volatility and possible cyclicality.

AI Analysis

Let me begin with the balance sheet. A debt-equity ratio of 0.03 means G M Breweries is practically debt-free; with promoter holding at 74.43%, the company is run by owners, not hired mercenaries. Book value is ₹369.60 and the return on equity is 19.06%, so the business has shown it can reinvest earnings without excessive leverage. The latest quarter's ₹202 Cr sales and ₹42 Cr profit imply a net margin around 20%, and sales grew 21.89%. That is the good part. Now the part that bothers me. Profit grew 91.22% while sales grew only 21.89%. In Mr. Graham's world, earnings are an opinion, cash is a fact. The reported free cash flow is negative, so the accounting profit is not being converted into cash. A fast grower with negative cash flow is often a borrower in disguise, although here the debt is tiny. That makes me think the negative cash flow is working capital or stock-in-trade, but still, I cannot value a business on earnings I cannot collect. The 52-week range of ₹666.05 to ₹1,328.80 with the price now at ₹968 tells me this is not a smooth compounder; it has a cyclical temperament. Dividend yield of only 0.75% means patience is not rewarded, so my return depends solely on growth and multiple. At P/E 13.93 and P/B 2.62, the stock is not expensive, but it is not deep value either. I need to see the margin expansion hold, cash conversion turn positive, and the growth survive a difficult year. Until then, I file it as a promising but cyclical grower, not a clear Buffett purchase.

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