Rico Auto Inds (RICOAUTO)

FairStock Score: 38/100 — MIXED

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

Key Financials

AI Analysis

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

At first glance, a 747.70% profit growth number is the kind of headline that excites the market. But Graham taught me to treat a single year's earnings as an illusion, not a verdict. The latest quarter gives the real picture: sales of ₹629 Cr yielded only ₹11 Cr of net profit, a net margin of roughly 1.75%. That is not a franchise; it is a high-volume, low-margin operation. The return on equity is 4.42% and the return on capital employed is 7.50%, weak by any standard, and especially poor for a business selling at 2.32 times book value. Book value is ₹49.97. At ₹116.05, I am asked to pay more than twice book for a company that earns less than five rupees per hundred rupees of equity. That fails my margin-of-safety test. The balance sheet adds worry: debt/equity of 0.91 is uncomfortable, and the dividend yield of 0.38% means shareholders are not being paid to wait. The P/E of 31.01 is too rich for this quality. I concede some positives: sales growth of 14.09% is respectable, the Piotroski F-score of 7 suggests improving fundamentals, and promoter holding at 50.34% at least aligns interests. But the PEG of 0.08 is a mathematical trap; it extrapolates an abnormal profit rebound. Auto components are cyclical, and today's recovery can reverse. I need evidence that margins can stay above 5%, ROCE can move toward 12% or more, and debt can come down. Until then, this is a possible cyclical turnaround, but not a compounder. I would prefer to watch from the sidelines.

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