Praj Industries (PRAJIND)

FairStock Score: 46/100 — MIXED

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

Key Financials

Strengths

• Low leverage with debt/equity of 0.14
• Positive free cash flow of ₹118 crore despite weak reported profits
• Respectable ROCE of 17.92% at the operating level
• Dividend yield of 1.89% offers some cash return while waiting

Concerns

• Profit growth collapsed by 80.80% and latest quarter shows a net loss of ₹12 crore
• Extremely expensive on P/E 79.13, P/B 5.45, and EV/EBITDA 23.32
• Graham Number of ₹69.31 and DCF of ₹1.66 imply a massive negative margin of safety of -358.75%
• ROE is only 3.77%, while sales growth is negative at -6.02%; FairStock Score is 20/100 and risky

AI Analysis

I begin where Graham taught me: with the numbers, not the story. Praj Industries shows a mixed scorecard. The balance sheet is not reckless—debt/equity is only 0.14 and free cash flow is positive at ₹118 crore. That keeps the company alive through a tough stretch. But the last year has not been good. Sales fell 6.02%, profit collapsed by 80.80%, and the latest quarter produced a ₹12 crore net loss on ₹841 crore of sales. A business that cannot protect its margins is not a wonderful company in my book. Return on equity is just 3.77%, while book value is ₹75.17. At ₹410.05, the market is pricing this industrial products company at a P/E of 79.13 and 5.45 times book. Graham would call that speculation, not investment. The Graham number is only ₹69.31, and the DCF says ₹1.66 under the assumptions given. My margin of safety is minus 358.75%—there is none. EV/EBITDA at 23.32 confirms an expensive relative value even when ignoring the depressed profit figures. ROCE of 17.92% is the one bright spot; it suggests operations can be capital-efficient at the right point in the cycle. The Piotroski score of 5/9 and Altman Z of 2.77 tell me to stay cautious, not careless. Promoter holding at 32.81% is acceptable but not a controlling majority of unquestionable alignment. This looks to me like a cyclical industrial name hitting a downcycle, not a predictable compounder. A 1.89% dividend and some free cash flow are small reassurances, but they do not compensate for an 80.80% earnings collapse and a recent loss. I would only be interested at a price that gives real margin of safety, probably far below today's ₹410.05. Wait, watch, and be patient.

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