IRM Energy (IRMENERGY)

FairStock Score: 42/100 — MIXED

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

Key Financials

Strengths

• Low leverage: Debt/Equity of 0.08 provides financial stability.
• Piotroski F-Score 7/9 indicates broadly sound financials and improving fundamentals.
• Profit growth of 38.42% with PEG near 0.99 offers some earnings momentum relative to valuation.
• Promoter holding of 50.07% aligns management interests with minority shareholders.
• P/B of 1.26 is not excessive against book value of ₹227.47.

Concerns

• Low ROE of 5.17% and ROCE of 8.26% suggest weak capital efficiency and limited pricing power.
• Sales growth is modest at 5.70%; high profit growth may be margin-driven and less sustainable.
• P/E of 21.83 appears rich for a business earning only ~5% ROE.
• Latest quarter net margin of roughly 5.3% (₹14 Cr profit on ₹265 Cr sales) is thin for an energy supplier.

AI Analysis

Let me look at IRM Energy the way Graham and Buffett would. A business’s real worth comes from return on capital and durability, not price momentum. This company sells LPG, CNG, PNG and LNG, so it operates in an energy distribution niche. At ₹286.20, the market capitalises it at ₹979 Cr, about 1.26 times book value of ₹227.47. That may sound reasonable, but the underlying earning power is thin: ROE is only 5.17% and ROCE is 8.26%. For an energy supplier, I want far more discipline in capital allocation. The balance sheet is clean — debt/equity is just 0.08 — and the Piotroski score of 7/9 suggests financial health is improving. Profit growth of 38.42% catches the eye, but sales growth is only 5.70%. That gap means margins are doing the work, not volumes; that is less certain and can reverse. The PEG ratio of 0.99 is only meaningful if the increased profitability is sustainable. With a P/E of 21.83 and ROE of 5.17%, I am not paying a premium for mediocrity. Latest quarter sales of ₹265 Cr and net profit of ₹14 Cr imply a net margin near 5%, not an outstanding business. Long-term compounding needs high returns on equity and a moat; here I struggle to see a wide moat in commodity-like energy distribution. Promoter holding at 50.07% is a good sign. The 52-week range shows volatility. The 0.63% dividend yield is a minor bonus. This is not a terrible business, but it is not a wonderful compounder. I would demand a meaningful margin of safety before acting.

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