Le Merite Export (LEMERITE)

FairStock Score: 26/100 — RISKY

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

Key Financials

Strengths

• Promoter holding at 59.65% aligns owner interest with minority shareholders.
• Piotroski F-Score of 6/9 indicates some recent improvement in financial health.
• Debt/Equity of 0.66 is within manageable levels, reducing immediate solvency risk.
• Latest quarter is profitable (₹2 Cr net profit on ₹73 Cr sales), confirming positive, albeit thin, earnings.

Concerns

• P/E of 87.26 and P/B of 8.63 are extremely expensive versus book value of ₹52.77 and weak earnings power.
• Sales growth of -22.92% shows shrinking top line; latest net margin is only ~2.7%.
• ROCE of 7.80% is lower than what a reasonable investor should expect for this valuation.
• Zero dividend and a 52-week range of ₹19.52–537.85 reflect speculative price action, not stable compounding.

AI Analysis

Let me assess Le Merite Export the way Graham would. The market cap is ₹1,138 Cr, but the latest quarter brings only ₹73 Cr of sales and ₹2 Cr of net profit. That implies an annual profit of roughly ₹8 Cr against a price-earnings multiple of 87. In other words, I am being asked to pay more than eight times book value of ₹52.77 for a business that earns just 7.8% on capital employed. That is not investing; it is paying up for hope. Sales fell 22.92%, and the 780% profit growth is from a very low base. The latest net margin is under 3%, which gives no margin of safety in a competitive textile export business. Debt/equity of 0.66 is manageable, but with declining turnover and thin profits, debt becomes a burden rather than a tool. Promoter holding at 59.65% is positive, and the Piotroski score of 6 suggests some operational improvement. Still, these factors do not justify 8.63 times book value for a company earning 7.8% ROCE. The 52-week range of ₹19.52 to ₹537.85 tells me this is a speculative re-rating, not a gradual compounding story. There is no dividend to cushion the wait. FairStock score of 26 confirms the risk. As Buffett says, it is far better to buy a wonderful company at a fair price than a fair company at a wonderful price. This is a tiny, cyclical, low-margin textile exporter at an extraordinary price. I will watch from the sidelines until sales stabilise, margins expand, and capital returns improve materially. If the business can show consistent quarterly earnings and better ROCE, I may revisit. But at ₹455.25, the market is pricing perfection that the fundamentals do not yet reveal.

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