Salzer Electron. (SALZERELEC)

FairStock Score: 26/100 — RISKY

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

Key Financials

Strengths

• Revenue growth of 23.40% shows strong demand momentum for the business.
• ROCE of 12.84% is above ROE of 10.23%, indicating the core operations generate a reasonable return on capital.
• Debt/equity of 0.83 is manageable, not dangerously leveraged.
• Latest quarter remains profitable: ₹13 crore net profit on ₹412 crore sales.

Concerns

• Profit growth is negative at -11.47% despite strong sales growth, showing clear margin compression.
• Piotroski F-Score of 4/9 and FairStock Score of 29/100 flag weak financial health and higher risk.
• Promoter holding of 37.48% is on the lower side, reducing owner-operator alignment.
• P/E of 22.33 with falling earnings and a dividend yield of only 0.38% offers little margin of safety.

AI Analysis

When I look at Salzer Electron, I try to ignore the noise and read the numbers. Revenue grew 23.40%, which suggests demand for its electrical equipment is real. But profit fell 11.47% in the same breath. That is the first warning. The latest quarter tells the same story: sales of ₹412 crore produced only ₹13 crore of net profit, a margin near 3%. A business with that thin a margin has little room for error. Return on equity is 10.23% and return on capital employed is 12.84% — respectable but not exceptional. With debt/equity of 0.83, leverage is there but not frightening. What worries me more is quality: the Piotroski score is 4 out of 9 and FairStock calls it 29/100, risky. The promoter holds only 37.48%, which is not the high ownership I prefer in India. At ₹641.05, the market capitalises the company at ₹1,164 crore, 22.33 times trailing earnings. That is not a bargain for a business whose profit declined. The PEG of 0.95 is flattering because it leans on sales growth, not profit growth. Earnings must catch up to justify the price. Book value is ₹287.44, so the stock trades at 2.23 times book; the asset base gives some support, but value investors should not confuse moderate valuation with margin of safety. The dividend yield of 0.38% offers no comfort while waiting. Salzer may be a cyclical business near a difficult patch, but I need evidence that margins are stabilising and profits can follow sales. I will keep it on my watch list, not in my portfolio.

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