Parag Milk Foods (PARAGMILK)

FairStock Score: 34/100 — RISKY

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

Key Financials

Strengths

• Sales growth of 14.46% shows the business is expanding despite a tough environment.
• ROE of 15.91% and ROCE of 14.13% indicate respectable capital efficiency.
• Debt/equity of 0.45 keeps financial leverage moderate.
• Promoter holding of 40.65% aligns management with minority shareholders.
• Latest quarter generated ₹1,013 Cr sales and a positive ₹30 Cr profit, proving operating scale.

Concerns

• Profit growth fell 3.63% while sales grew, pointing to margin compression.
• Latest quarter net margin is only ~2.96% (₹30 Cr on ₹1,013 Cr), leaving little cushion.
• Piotroski F-score of 4/9 signals weak fundamental health.
• At P/E 18.87 and P/B 2.96, the stock is not cheap for a business with declining profit and a 0.49% dividend yield.

AI Analysis

Let me look at Parag Milk Foods the way I look at any business: can I understand it, does it earn good returns, and is the price sensible? Dairy is easy to understand – people buy milk and paneer every day. But easy to understand does not mean easy to make money. Sales rose 14.46%, which is encouraging. Yet reported profit fell 3.63%. That tells me that growth is costing more money: input costs, competition, or both. Latest quarter sales of ₹1,013 Cr produced only ₹30 Cr net profit, a razor-thin margin. In Graham's language, a company with such a thin margin has little room for error. The balance sheet is manageable: debt/equity 0.45 and ROE 15.91%, ROCE 14.13% – decent, but not a spectacular moat. If this were a wonderful franchise, I would expect higher returns on capital and steadier pricing power. The Piotroski F-score of 4/9 is a warning, not a conviction. Promoter holding at 40.65% is respectable, so owners have skin in the game, but the dividend yield of 0.49% means I am not being paid to wait. Valuation? At ₹231.13, the P/E is 18.87 and P/B is 2.96. For a business whose profit is declining, that is not an obvious bargain. The stock is far from its 52-week high of ₹376.95; but a falling price is not enough – I need a margin of safety. I would want to see profit growth turn positive before paying 19 times earnings. This is a decent dairy company, maybe a future stalwart, but not a stock I can label wonderful today. I would keep it on my watchlist and wait for either better numbers or a lower price.

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