Shilpa Medicare (SHILPAMED)

FairStock Score: 34/100 — RISKY

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

Key Financials

Strengths

• Strong recent operating momentum: sales growth 28.32% and profit growth 69.92%; latest quarter net profit ₹45 Cr on sales ₹410 Cr.
• Low leverage with debt/equity of 0.24, keeping financial risk manageable.
• Piotroski F-score of 7/9 points to improving fundamentals across profitability, leverage, and efficiency.
• Promoter holding of 40.13% provides reasonable alignment with minority shareholders.

Concerns

• Very low capital efficiency: ROE of 2.31% and ROCE of 7.82%, yet the stock trades at 3.17 times book value.
• High P/E of 37.22 leaves little room for error if growth decelerates from the recent 69.92% profit surge.
• Negligible dividend yield of 0.15% means investors receive no income while waiting for growth to materialize.
• FairStock Score of 33/100 and the sharp fall from the 52-week high of ₹825.40 to ₹427.60 highlight elevated risk and market skepticism.

AI Analysis

Let me start with what I like. Shilpa Medicare has momentum: sales grew 28.32% and profits grew 69.92%, and the latest quarter shows sales of ₹410 Cr with net profit of ₹45 Cr. The balance sheet is conservative, with debt/equity of only 0.24, and a Piotroski F-score of 7/9 suggests fundamentals are improving. Promoter holding of 40.13% at least keeps management aligned. But I do not pay for growth when the underlying business earns low returns on capital. This company earns just 2.31% ROE and 7.82% ROCE. With book value at ₹134.92, the market is paying ₹427.60, or 3.17 times book, for a business that historically turns that book into very modest income. That is a Graham red flag. A 37.22 P/E is fine only if the current 69.92% profit growth is durable, but such high growth rates often revert to mean, especially in pharma. PEG of 0.76 looks tempting, but PEG is only useful when the earnings base is quality and sustainable. The falling share price from ₹825.40 to ₹427.60 within the 52-week range tells me the market has already questioned the story. Dividend yield of 0.15% means I am not being paid to wait. I cannot identify a durable moat from these numbers. Pharma requires regulatory strengths and molecule-level visibility, and I have no evidence here. The low ROE and thin returns mean even reinvested earnings may not create much value. FairStock score of 33/100 labels this risky, and I agree. This is a fast grower, not a stalwart. I would need proof that higher sales are converting into higher returns on capital before I can call it a compounding machine. For now, it is a show-me story at an optimistic price.

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