Pentagon Rubber (PENTAGON)

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

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

At first glance, this is a small, simple rubber business. But my test is not whether a company is easy to understand; it is whether the economics are attractive. Pentagon Rubber has a market cap of ₹50 crore and sells at ₹69.85, or 20.81 times earnings. That is a demanding price for a company whose profit fell 32.26% last year. When sales grow 10.04% but profits shrink by a third, I suspect margin compression or rising costs. The latest quarter shows net profit of only ₹1 crore on sales of ₹27 crore — a thin margin. Return on capital employed is 7.38%, far below what a quality business should earn. There is no dividend, so the investor's entire return depends on the share price, which has already ranged from ₹49.15 to ₹99.50 in a year. The Piotroski F-score of 4 out of 9 is another warning; it suggests financial health is not robust. Promoter holding of 70.04% is good for alignment, but it does not compensate for weak returns and a high multiple. With a PEG ratio of 2.07 and negative profit growth, I see no margin of safety. I would prefer a business with stable margins, high returns on capital, and a reasonable price. Pentagon Rubber fails that test today. In Graham's language, the figures do not support the price; I will wait on the sidelines until the business shows better profitability or the price falls enough to give me protection.

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