Himadri Special (HSCL)

FairStock Score: 64/100 — STEADY

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

Key Financials

Strengths

• Strong return ratios: ROE 18.97% and ROCE 22.01%.
• Clean balance sheet: D/E only 0.21 and free cash flow positive at ₹212 Cr.
• Piotroski F-Score 8/9 and Altman Z-Score 5.58 indicate solid financial health.
• Long-term growth evident from 5-year revenue CAGR of 22.40% and promoter holding of 52.49%.

Concerns

• Valuation is extremely stretched: P/E 34.64 and P/B 7.27, with price far above Graham Number ₹159.83 and DCF value ₹224.66.
• Negative margin of safety of -203.36% leaves no room for error.
• Latest sales growth is -2.63%, yet profit grew 31.79% — this divergence may reflect cyclical margins, not durable growth.
• PEG of 2.03 and dividend yield of only 0.12% make the risk-reward unattractive at current price.

AI Analysis

Let's look at Himadri Special as a business first. The numbers tell me this is a company with genuine strengths: return on equity of 18.97%, return on capital employed of 22.01%, and a debt-equity ratio of just 0.21. Free cash flow is positive at ₹212 crore, the Piotroski score is a strong 8/9, and the Altman Z-score of 5.58 suggests no immediate financial distress. Promoters hold 52.49%, which is good. Over the last five years, revenue has compounded at 22.40%, so this is not a stagnant business. But value investing is not simply finding a good business; it is buying good businesses at sensible prices. At ₹536.20, Himadri costs 34.64 times earnings and 7.27 times book value. Graham's number, a conservative check on value, is only ₹159.83 — that means I am paying more than twice the price Graham would have found fair. My DCF estimate of ₹224.66 also sits far below the market price. The margin of safety is deeply negative at -203.36%. A 0.12% dividend yield offers no income to wait with. I also have to be honest about the industry. Carbon black is cyclical. Sales actually declined by 2.63% in the latest year, yet profit rose 31.79%. That kind of divergence often comes from margin tailwinds or cost advantages, not demand pricing power, and it may not persist. The PEG ratio of 2.03 tells me growth is already fully — or more than fully — priced in. The negative EV/EBITDA figure also makes me suspicious of some accounting or data peculiarity; I wouldn't base a decision on it. This is a well-managed cyclical, not a steady compounder I can buy blindly. I would put it on my watch list, not in my portfolio. Let the price come closer to my value, and I will revisit. Until then, discipline matters more than momentum.

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