RACL Geartech (RACLGEAR)

FairStock Score: 30/100 — RISKY

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

Key Financials

Strengths

• Sales growth of 19.47% and profit growth of 91.13% show strong earnings momentum.
• ROE of 19.39% is respectable and reflects good capital allocation.
• Piotroski F-Score of 7/9 suggests improving financial fundamentals.
• PEG ratio of 0.72 indicates growth may not be fully priced if earnings momentum persists.
• Latest quarter revenue of ₹131 Cr and profit of ₹15 Cr support the ongoing recovery.

Concerns

• P/E of 39.67 and P/B of 6.85 leave very little margin of safety.
• ROCE of 12.54% is much lower than ROE, meaning leverage is boosting equity returns.
• Dividend yield of just 0.11% makes valuation entirely dependent on future capital gains.
• Promoter holding of 42.68% is moderate, and FairStock Score of 39/100 indicates mixed quality.

AI Analysis

Looking at RACL Geartech, I'm reminded that a wonderful business must be bought at a sensible price. The figures here show an auto component maker growing quickly: sales up 19.47% and profit up 91.13%. Return on equity is a solid 19.39%, and with a Piotroski F-Score of 7/9, the financial health is improving. A debt-to-equity ratio of 0.72 is manageable, not too levered for an industry exposed to cycles. The latest quarter—₹131 Cr sales and ₹15 Cr profit—suggests momentum is continuing. But I cannot ignore the price. At ₹1,241, I'm paying 39.67 times earnings and 6.85 times book value for a business whose book value is only ₹181.10. That is not a Graham margin of safety. The low dividend yield of 0.11% means I'm asked to wait mostly for capital gains. The promoter holding of 42.68% is moderate; I'd like more skin in the game. The FairStock score of 39/100 is mixed, telling me this is no pure compounder. Indeed, return on capital employed is 12.54%, so the high ROE is helped by debt, not purely by operating strength. The PEG ratio of 0.72 is the only reason I pause before dismissing the stock; if the 91% profit growth can persist even partly, the earnings multiple will get cheaper. But such growth is rare and often reverts. As Buffett, I prefer the price to be dull and the business bright. Here the business is interesting, but the price demands perfection. I would wait for a better price, or see sustainable growth before paying this premium.

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