Munjal Showa (MUNJALSHOW)

FairStock Score: 40/100 — MIXED

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

Key Financials

Strengths

• Trades at a P/B of 0.79, so investors pay ₹130.33 for ₹165.92 of book value—an asset-backed cushion.
• Promoter holding is 65.02%, aligning management and minority shareholders.
• Piotroski F-Score of 7/9 points to improving financial fundamentals.
• Dividend yield of 3.52% provides a tangible return while waiting.
• Profit growth of 109.53% and a low PEG of 0.26 indicate an earnings recovery, though from a low base.

Concerns

• ROE of 4.67% and ROCE of 0.27% signal weak returns on capital and limited pricing power.
• Latest quarter net margin is only about 3.1% (₹11 Cr profit on ₹350 Cr sales), leaving little room for cost or demand shocks.
• Sales growth of 9.59% is modest, so the profit surge may be a low-base rebound rather than durable expansion.
• Debt/Equity is N/A, so leverage and balance-sheet risk cannot be fully verified.

AI Analysis

At ₹130.33, Munjal Showa is priced at ₹512 Cr. Book value is ₹165.92 per share, so the market is giving me a rupee of net assets for about 79 paise. Graham taught me to like such discounts, but only if those assets can earn a reasonable return. Here, ROE is just 4.67%, and ROCE is a startling 0.27%. This is not the profile of a wonderful business with a moat; it is an auto-component company with weak pricing power and poor returns on the capital it employs. The reported profit growth of 109.53% is eye-catching, but sales growth of only 9.59% and a latest quarter net profit of ₹11 Cr on ₹350 Cr of sales—a thin 3.1% margin—suggest a rebound from a low base rather than durable compounding. Debt/equity is not available, so I cannot fully assess leverage. The Piotroski F-Score of 7 is positive, and promoter holding of 65.02% is reassuring. A 3.52% dividend yield also gives me something tangible while waiting. However, I must stay disciplined. A P/B of 0.79 and a PEG of 0.26 can be seductive, but low-multiple stocks can become value traps if return on capital fails to improve. At 15.77 times earnings, the stock is not obviously cheap once earnings normalise. I need to see ROE move toward double digits and ROCE climb well above this near-zero level. Until then, Munjal Showa remains an asset-backed, promoter-owned cyclical that may be turning around, but I will wait for consistent quarterly proof before calling it a true Graham bargain.

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