L G Balakrishnan (LGBBROSLTD)

FairStock Score: 49/100 — MIXED

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

Key Financials

Strengths

• High returns: ROE of 17.36% and ROCE of 19.86% show efficient capital deployment.
• Very low leverage: Debt/Equity of just 0.10 indicates a financially strong balance sheet.
• Strong growth: Sales up 20.63% and profit up 24.75%, with latest quarter sales of ₹817 Cr and net profit of ₹88 Cr.
• Piotroski F-Score of 7/9 reflects decent fundamental health.
• PEG of 0.85 suggests growth is reasonably valued if the trajectory is sustained.

Concerns

• Valuation is not cheap: P/E of 19.29 and P/B of 3.21 leave limited margin of safety.
• Dividend yield is low at 1.03%, offering little income support.
• Auto component business is cyclical and exposed to auto demand and input costs.
• FairStock Score of 47/100 signals a mixed overall picture.

AI Analysis

Let me evaluate L G Balakrishnan the way I would any business. First, do I understand it? Yes, auto components, but it is tied to the automobile cycle, so I need discipline. The numbers show solid economics: return on equity at 17.36% and return on capital employed at 19.86%, with almost no debt—debt-to-equity just 0.10. That combination tells me management is not running the company on borrowed money, and the business is generating real earnings. With a Piotroski F-Score of 7/9, the fundamentals are reasonably healthy, though not flawless. Growth is impressive: sales up 20.63%, profits up 24.75%; latest quarter sales were ₹817 Cr and net profit ₹88 Cr. At a PEG of 0.85, the earnings multiple is not excessive if this growth continues. But I always ask: what am I paying? At ₹1,784.20, the P/E is 19.29 and price-to-book is 3.21—roughly three and a half times book. That is not a low-risk entry. Book value is ₹555.64, so the market is paying a hefty premium for quality. The share trades between ₹1,222 and ₹2,048 over the year, so it is below the high but not cheap. I also note promoter holding is 34.82%. That is decent alignment, though I would prefer more. Dividend yield is only 1.03%, so income is not the reason to own this. The mixed FairStock Score of 47 reminds me that quality and growth are here, but I must demand a margin of safety. This is a growing business with a clean balance sheet, but at this price, I would wait for a better entry or proof that growth can survive the auto cycle. If it keeps earning 17-20% on capital, it may reward patient owners, but not at any price.

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