R K Swamy (RKSWAMY)

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

Key Financials

Strengths

• Profit growth of 23.97% and sales growth of 15.46% show positive momentum.
• Low debt/equity of 0.15 and a Piotroski F-Score of 7/9 indicate sound financial health.
• Promoter holding of 69.61% aligns management interests with minority shareholders.
• Dividend yield of 1.50% provides a modest return while waiting.

Concerns

• ROE of 7.57% and ROCE of 9.91% reflect weak capital efficiency.
• Latest quarter net profit of ₹3 crore on ₹89 crore sales implies a thin margin of about 3.4%.
• Stock has fallen sharply from its 52-week high of ₹163.89, suggesting negative market sentiment.
• P/E of 24.89 and P/B of 1.88 appear rich relative to the company's returns.

AI Analysis

At ₹89.39, R K Swamy is a business that I find interesting but far from a no-brainer. The top line grew 15.46% and profits grew 23.97%, so there is momentum. But I always ask how much capital is needed to produce that growth, and here the answer is mediocre. ROE is only 7.57% and ROCE is 9.91%, meaning every rupee of equity earns less than eight paise. That fails the Graham test of requiring a decent return on capital. The latest quarter, with ₹89 crore sales and just ₹3 crore profit, highlights the thin, fragile margin of an advertising agency. Where is the moat? Clients can shift accounts, and there is no clear pricing power in these numbers. The balance sheet is clean, with debt/equity of 0.15 and a Piotroski score of 7/9. Promoter holding of 69.61% is a plus, as is a small 1.50% dividend. But a 24.89 times trailing earnings valuation, with a PEG of 1.26, is not cheap for a business with such modest returns. The stock has fallen from ₹163.89 to ₹89.39, and value investors must be careful: a falling knife can still cut. I need to see higher ROE, stronger margins, or a significantly lower price before committing capital. The FairStock Score of 37/100 tells me the picture is mixed. If management can compound profits without needing too much extra capital, this could become a decent grower. But for now, the numbers suggest an average business at an above-average price. In Buffett's language, growth is not value; value comes from growth plus acceptable returns on capital. I will watch, not buy.

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