Neuland Labs. (NEULANDLAB)

FairStock Score: 52/100 — MIXED

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

Key Financials

Strengths

• Low leverage: Debt/Equity of 0.16 and Altman Z-score of 6.42 indicate strong financial stability.
• ROCE of 18.66% shows reasonable capital efficiency in operations.
• Piotroski F-Score of 7/9 suggests decent recent financial health across profitability, leverage, and efficiency metrics.
• Five-year revenue CAGR of 9.53% and positive free cash flow of ₹19 Cr indicate some operating resilience.
• Latest quarter sales of ₹440 Cr show the business still generates meaningful scale.

Concerns

• Extremely expensive valuation: P/E of 91.86, P/B of 12.60, and EV/EBITDA of 15.65 despite decelerating growth.
• Profit growth declined 40.26%, with latest quarterly net profit of only ₹41 Cr.
• Margin of safety deeply negative: Graham Number of ₹1,934.52 implies the stock trades far above any conservative intrinsic value, and DCF intrinsic value is given as ₹27.57.
• Low shareholder returns: dividend yield of 0.09% and free cash flow of ₹19 Cr against a ₹16,454 Cr market cap offer negligible earnings yield.

AI Analysis

At ₹14,977, Neuland Labs is a business I would struggle to justify buying. The company has a respectable balance sheet—debt/equity of 0.16 and an Altman Z-score of 6.42—so bankruptcy risk is remote. ROCE of 18.66% shows the core operations generate reasonable returns on capital, and the Piotroski score of 7/9 hints at solid recent fundamentals. But a good business is not always a good investment. Neuland's latest quarter shows net profit of only ₹41 Cr on sales of ₹440 Cr; annualised, that supports a P/E near 92 and a P/B above 12.6. That is a steep price for a company whose profit has fallen 40% and sales growth is just 2.7%. Even the five-year revenue CAGR of 9.53% does not justify a three-digit P/E. Graham's number works out to ₹1,934.52, meaning the margin of safety is deeply negative—the exact opposite of what value investing demands. The DCF intrinsic value given, ₹27.57, is absurdly far below the market price; I treat one model cautiously, but it supports the same conclusion. With a dividend yield of 0.09%, you are not getting paid to wait. ROE of 11.75% is below what I want from a great compounding machine, and free cash flow of ₹19 Cr is tiny relative to a ₹16,454 Cr market cap. Neuland may be a decent operator, but Mr. Market is paying a spectacular growth price for a slow grower. I would need a much lower price, visible profit recovery, and sustained sales acceleration before revisiting. For now, this is a case of good business, bad price.

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