Graphite India (GRAPHITE)

FairStock Score: 58/100 — STEADY

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

Key Financials

Strengths

• Debt/equity of only 0.05 gives strong balance sheet cushion in a cyclical industry.
• Positive free cash flow of ₹298 Cr supports internal funding of capex and dividends.
• Piotroski F-Score of 8/9 indicates solid recent financial health and operating efficiency.
• High promoter holding of 65.34% aligns ownership with minority shareholders.
• Profit growth of 31.08% shows cyclical earnings recovery momentum.

Concerns

• Valuation is rich at P/E 40.36 and EV/EBITDA 49.63 for a company with ROE of only 5.61%.
• Stagnant top line with 1.54% sales growth and 5.51% five-year revenue CAGR suggests lack of durable growth.
• Price of ₹736.40 is far above Graham Number of ₹337.28, implying negative margin of safety of -112.91%.
• Altman Z-Score of 2.41 places the company in a caution zone, not a safe haven.

AI Analysis

At ₹736, Graphite India is a classic cyclical, not a compounder. I look at the economics first: the electrode business is inherently volatile, and the numbers confirm it. Sales grew only 1.54% and five-year revenue CAGR is 5.51%; latest quarter sales are ₹642 Cr and net profit ₹67 Cr, a modest margin. The 31.08% profit growth is welcome but likely reflects the cyclical up-leg, not a durable franchise. The balance sheet is sound: debt/equity 0.05, and free cash flow ₹298 Cr gives cushion. Piotroski 8/9 suggests recent financial health, but I cannot anchor on that in a cyclical business. Valuation is the problem. At P/E 40.36, P/B 2.45, EV/EBITDA 49.63, the market is paying a rich multiple for a company with ROE of only 5.61%. Book value is ₹300.24; price is more than 2.4 times book. Graham's number is ₹337.28, meaning my margin of safety is negative 112.91%. Even the DCF number of ₹816.99 is not far enough above today's price to compensate for the industry's boom-bust nature. Altman Z of 2.41 is caution, not comfort. I prefer a wonderful business at a fair price; Graphite India is an okay business at a questionable price. The high promoter holding 65.34% and dividend yield 1.53% are fine, but they don't justify overpaying. For a value investor, patience matters: wait for a lower price or a clear sustained improvement in electrode fundamentals. This is a cyclical, not a stalwart.

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