Honda India (HONDAPOWER)

FairStock Score: 44/100 — MIXED

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

Key Financials

Strengths

• Zero debt (D/E 0.00) gives strong financial stability and downside protection.
• High promoter holding of 66.67% aligns management interests with minority shareholders.
• Sales and profit growth are both strong at 32.43% and 32.69%, indicating business momentum.
• Piotroski F-Score of 7/9 suggests improving fundamentals and operational health.
• Dividend yield of 4.87% provides a decent income cushion while waiting for growth.

Concerns

• ROE of 8.97% and ROCE of 12.81% are below the 15% threshold Buffett/Graham prefer for true compounding machines.
• P/E of 26.24 and P/B of 2.84 are not cheap; valuation already factors in healthy growth.
• Latest quarter net profit of ₹17 Cr on sales of ₹270 Cr implies a thin net margin of roughly 6.3%, leaving little room for hiccups.
• Price is down significantly from the 52-week high of ₹3216, suggesting the market is already questioning sustained growth.

AI Analysis

Let me start with what I like. This is a debt-free business—D/E zero—with promoters owning 66.67%, so my interests are aligned. Sales grew 32.43% and profits 32.69% in the latest year; that is the kind of momentum I want to see. The Piotroski F-Score of 7/9 tells me the fundamentals are improving, not deteriorating. And a 4.87% dividend yield while paying for growth is a nice backstop. But I must check the moat. ROE is only 8.97% and ROCE 12.81%. My mentor Graham would say a business earning below 15% on equity is not a great compounding machine unless the growth is very long-lived. Given P/E of 26.24 and P/B of 2.84, you are paying a premium for that growth. The PEG ratio of 0.81 suggests the market isn't overpaying if 32% growth continues, but in Indian industrials, cycles can turn quickly. The latest quarter shows sales of ₹270 Cr but net profit of only ₹17 Cr—a thin margin of roughly 6%. That makes me cautious; a small drop in volumes can dent earnings. The stock is ₹2271, well below the 52-week high of ₹3216. The market is already voting with some doubt. Still, with zero debt, strong promoter ownership, high dividend, and a FairStock score of 48/100 mixed, this isn't a cigar butt or a stalwart. It is a fast grower selling at a reasonable-if-not-cheap price. I would need to see ROE climb closer to 15% and a few more quarters confirming growth before I put a large amount to work. For now, I might keep it on the watchlist, or buy a small starter position and add if growth proves durable.

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