Redtape (REDTAPE)

FairStock Score: 34/100 — RISKY

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

Key Financials

Strengths

• High return ratios: ROE 32.98% and ROCE 21.67% indicate efficient capital use and brand strength.
• Strong growth: Sales up 18.98% and profit up 43.05%, with PEG around 0.99 suggesting reasonable growth-adjusted valuation.
• Healthy Piotroski F-Score of 7/9 points to improving financial health.
• Promoter holding of 71.79% aligns management interests with minority shareholders.
• Latest quarter shows scale: Sales ₹787 Cr and Net Profit ₹105 Cr.

Concerns

• Elevated leverage: Debt/Equity of 1.08 can amplify ROE and adds financial risk.
• Rich valuation: P/E of 30.59 and P/B of 10.03 leave little margin of safety.
• Low dividend yield of 0.64% offers minimal downside support.
• Mixed FairStock Score of 47/100 signals that quality and price are not fully aligned.

AI Analysis

Redtape is not the classic Graham net-net; it is a growing footwear brand with tangible earning power. At ₹126.35, the market capitalizes it at ₹6,489 Cr, and expects 30.59 times trailing profit. That is a rich price. Book value is just ₹12.60, so I am paying over 10 times book for intangible brand and future growth. ROE of 32.98% and ROCE 21.67% show excellent capital allocation, but I must not let these numbers hypnotize me. Debt/equity is 1.08, so leverage is helping inflate that ROE; a business with this debt needs careful watching in a slow monsoon or fashion shift. Encouragingly, sales grew 18.98% and profits 43.05% in the latest year. The PEG ratio of 0.99 suggests the high P/E is not absurd if the growth continues, but 43% profit growth is unlikely to be permanent. The Piotroski F-Score of 7/9 tells me the balance sheet isn't deteriorating, and promoter holding at 71.79% keeps management aligned with minority holders. Dividend yield of only 0.64% means I am paid little while I wait. The latest quarter shows sales ₹787 Cr and net profit ₹105 Cr, so margins remain decent. Still, FairStock score is 47/100, a mixed signal. In Buffett's terms, this is a wonderful business partly funded by debt, at a fair-to-expensive price. Graham would ask for margin of safety; at 30 times earnings I don't have one. I would keep it on the watch list, not build a full position. Growth is real, but the arithmetic must work over ten years. I need to see debt fall and profits compound before paying this multiple.

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