Gujarat Alkalies (GUJALKALI)

FairStock Score: 26/100 — RISKY

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

Key Financials

Strengths

• Low leverage with debt-to-equity of 0.06 provides financial stability during the downturn.
• Stock trades at a discount to book value: P/B of 0.81 against book value of ₹885.77.
• Dividend yield of 3.31% offers some return while the cycle is weak.
• Promoter holding of 46.28% aligns management interests with minority shareholders.
• Sales still grew 1.46%, showing some stability despite commodity pressure.

Concerns

• Latest quarter posted a net loss of ₹20 Cr on sales of ₹1,044 Cr, and annual profit fell 77.65%.
• ROCE is negative at -0.34% and ROE is negligible at 0.53%, signalling poor capital productivity.
• P/E of 0.00 reflects no positive earnings, making conventional valuation impossible.
• Piotroski F-Score of 3/9 and FairStock Score of 0/100 point to deteriorating fundamentals.

AI Analysis

As a value investor, I first ask whether the business earns a return on the capital it employs. Gujarat Alkalies is a commodity chemicals producer, which means it is largely a price-taker. The figures confirm the cyclical pain: sales growth is just 1.46%, while profit growth has fallen 77.65%. The latest quarter generated ₹1,044 Cr of revenue but still produced a net loss of ₹20 Cr. So the reported P/E of 0.00 is not a sign of cheapness; it is a sign of missing earnings. What attracts me is the balance sheet. At ₹718.80, the stock trades below book value of ₹885.77, a P/B of 0.81, and debt-to-equity is only 0.06. That means the company is not at risk of insolvency, and shareholders receive a 3.31% dividend yield while waiting for the cycle to turn. Promoter holding of 46.28% is reassuring. However, ROE is just 0.53% and ROCE is negative at -0.34%, meaning the assets are currently not earning their cost of capital. The Piotroski F-Score of 3/9 and FairStock Score of 0/100 underline the deterioration. This is a cyclical stock in a downcycle, not a wonderful franchise. Benjamin Graham would call the sub-book price a margin of safety; Warren Buffett would remind me that value comes from future earning power, not merely stated assets. I would not buy today simply because the stock looks statistically cheap. I need evidence that caustic soda pricing has recovered, quarterly profits have turned positive, and return on capital is moving upward. Until then, this remains an interesting cyclical watch, not a committed investment.

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