Lux Industries (LUXIND)

FairStock Score: 20/100 — RISKY

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

Key Financials

Strengths

• Sales growth of 21.59% shows continued demand and distribution strength.
• Debt-to-equity of 0.33 is moderate, and ROCE of 12.54% is reasonable.
• Promoter holding of 74.19% aligns management interests with minority shareholders.
• If margins recover, the current revenue base offers significant operating leverage.

Concerns

• Profit growth fell 46.66%, and latest quarterly net profit of ₹13 Cr on ₹673 Cr sales implies a net margin below 2%.
• ROE of just 6.56% with P/E of 23.90 and P/B of 3.21 leaves little margin of safety.
• Piotroski F-score of 4/9 indicates weak and deteriorating financial fundamentals.
• Dividend yield of only 0.22% provides negligible income while investors wait for a turnaround.

AI Analysis

When I study Lux Industries, I try to stay with the numbers, not the story. Sales grew 21.59%, which sounds fine, but profit fell 46.66%. In the latest quarter, ₹673 crore of revenue produced only ₹13 crore of net profit—that is a net margin of under 2%. As Benjamin Graham taught, the margin of safety lies in earnings, not optimism. At ₹1,756, the market capitalises the company at ₹2,709 crore, or 23.90 times earnings. Paying 24 times for a business whose profits have collapsed and whose ROE is just 6.56% is not value investing; it is hope. Book value is ₹547.42, so the price-to-book of 3.21 gives little cushion. ROCE of 12.54% is okay but not exceptional. Debt-to-equity of 0.33 is not alarming, and promoter holding of 74.19% is positive—owners have skin in the game. But a Piotroski F-score of 4 out of 9 tells me the financial health has deteriorated. This is a low-moat, competitive garment business. High sales growth without profit growth usually means pricing power is absent; the company is chasing revenue at the cost of margins. The dividend yield of 0.22% is negligible. A 52-week range of ₹824 to ₹1,823 shows the stock has rallied sharply, likely betting on a turnaround. But in Graham's words: 'The investor's chief problem—and even his worst enemy—is likely to be himself.' I need evidence of margin recovery before buying. This is a possible turnaround, not a proven one. I would wait for several quarters of expanding margins, improving ROE above 12–15%, and a lower entry price.

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