GMM Pfaudler (GMMPFAUDLR)

FairStock Score: 12/100 — RISKY

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

Key Financials

Strengths

• Piotroski F-Score of 7/9 points to broadly sound financial health, not deeply distressed.
• Sales growth of 10.23% shows the business is still expanding at the top line.
• ROCE of 13.09% is meaningfully above ROE of 7.61%, indicating the operating asset base earns decent returns.
• The stock is 30% below its 52-week high of ₹1,310, reducing some speculative enthusiasm.

Concerns

• Latest quarter net loss of ₹9 Cr on sales of ₹884 Cr signals margin and profitability pressure.
• Profit growth of only 2.77% against 10.23% sales growth gives a PEG of 5.76, extremely expensive.
• P/E of 37.47 and P/B of 5.36 offer no margin of safety at the current price.
• ROE of 7.61%, dividend yield of 0.21%, and just 25.18% promoter holding are weak for minority investors.

AI Analysis

At ₹914, GMM Pfaudler costs me 37.47 times last year's earnings. That is a price that demands near-perfection, and I don't see perfection. Sales grew 10.23%, but profit grew just 2.77%; the latest quarter had a ₹9 crore loss against ₹884 crore of sales. That is a classic cyclical, not a predictable compounder. I look first for a margin of safety. Here I get none: book value is ₹170.63, and I'd be paying 5.36 times that. Return on equity is only 7.61%, and while return on capital employed of 13.09% is more respectable, it does not justify a P/E and PEG ratio of 5.76. Debt-to-equity at 0.90 leaves room for stress in a downturn. The Piotroski F-score of 7 suggests the company hasn't deteriorated badly; I'll give credit for that. But a business that loses money in a quarter while trading at these multiples is not a business I can value. The dividend yield of 0.21% gives no compensation for waiting, and promoter holding of 25.18% is not the outsider-owner profile I prefer. The stock has already fallen from ₹1,310 to ₹914, but a falling knife can cut deeper. If GMM Pfaudler is a good business, I want it at a price that builds in a cushion; at 37 times earnings, the cushion is missing. I'd rather miss the move than overpay. I will keep it on the watchlist and wait for either materially higher margins and profits or a meaningfully lower price. This is not a Buffett purchase today.

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