Magellanic Cloud (MCLOUD)
Slow GrowerFairStock Score: 50/100 — MIXED
Score breakdown: P/E: 2/3 · ROCE: 1/2 · Growth: 1/2 · Dividend: 0/1
Key Financials
| Current Price | ₹28.48 |
| Market Cap | ₹1,677.66 Cr |
| P/E Ratio | 16.18 |
| ROCE | 22.91% |
| ROE | 18.97% |
| Dividend Yield | 0.1% |
| Profit Growth | 32.3% |
| Debt/Equity | 0.43 |
| Sales Growth | 31.5% |
| Promoter Holding | 54.04% |
| 52-Week Range | ₹19.4 — ₹87 |
| Sector | IT - Software |
| Book Value | ₹11.71 |
Strengths
- ROCE of 22.91% indicates efficient use of capital
- Debt/Equity of 0.47 and Piotroski F-score of 7/9 suggest manageable financial risk
- Promoter holding of 54.04% aligns management with minority shareholders
- Latest quarter net profit of ₹29 Cr on sales of ₹164 Cr shows current earnings power
Concerns
- ROE of 9.08% is mediocre, yet the stock trades at 7.49 times book value
- Profit growth of only 4.26% and PEG of 2.18 mean valuation is not backed by growth
- Dividend yield of 0.12% provides negligible return for waiting
- Price collapse from ₹90.50 to ₹25.48 reflects sharp market skepticism
AI Analysis
At ₹25.48, Mr Market offers me Magellanic Cloud at a market cap of ₹1,477 crore. The first thing I ask is whether I understand the economics. It is a software and consulting business with a ROCE of 22.91%, which is decent, and debt/equity of only 0.47, so the balance sheet is not highly stressed. But my mentor taught me that price is what you pay, value is what you get. Book value is just ₹3.40, so at ₹25.48 I am paying 7.49 times book for a company that earns only 9.08% on equity. That is a mismatch: a premium multiple should be backed by superior returns and growth. Here sales grew only 8.26%, and profit grew just 4.26%. A P/E of 13.62 looks moderate at first glance, but the PEG of 2.18 tells me the growth rate does not justify the multiple. With a dividend yield of 0.12%, I am not being paid to wait while the story plays out. Promoter holding of 54.04% is a positive, but ownership structure alone is not a durable competitive advantage. The 52-week range, ₹19.40 to ₹90.50, shows how moody Mr Market can be, and being near the lows can be dangerous if the fundamentals are merely ordinary. The latest quarter, with ₹164 crore sales and ₹29 crore net profit, is respectable, and the Piotroski score of 7/9 suggests financial health is intact. Yet one quarter does not make a franchise. I need a margin of safety, and 7.49 times book with single-digit profit growth does not give me that. This is a slow grower at best. It goes on my watchlist, not into my portfolio.
Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer