SML Mahindra (SMLMAH)
CyclicalFairStock Score: 39/100 — MIXED
Score breakdown: P/E: 0/3 · ROCE: 2/2 · Growth: 2/2 · Dividend: 0/1
Key Financials
| Current Price | ₹5,134.5 |
| Market Cap | ₹7,430.47 Cr |
| P/E Ratio | 47.62 |
| ROCE | 27.12% |
| ROE | 47.96% |
| Dividend Yield | 0.46% |
| Profit Growth | -5% |
| Debt/Equity | 0.56 |
| Sales Growth | 13.2% |
| Free Cash Flow | ₹47,05,495.04 Cr |
| Promoter Holding | 58.97% |
| 52-Week Range | ₹2,749 — ₹6,650 |
| Sector | Agricultural, Commercial & Construction Vehicles |
| Book Value | ₹358.87 |
Strengths
- Return on equity of 47.96% and ROCE of 27.12% indicate efficient capital deployment and a strong franchise.
- Sales growth of 62.53% and reported profit growth of 1,000% show the business is in a powerful upcycle.
- Promoter holding of 58.97% keeps management aligned with minority shareholders.
- Piotroski F-Score of 7/9 and manageable debt/equity of 0.56 suggest decent financial health.
Concerns
- Valuation is rich: P/E of 43.64 and P/B of 16.37 leave no margin of safety.
- Latest quarter net profit of ₹18 Cr on ₹539 Cr sales is a thin ~3.3% margin and does not support the high multiple.
- Reported free cash flow of ₹47.05 lakh Cr appears nonsensical and raises a data-integrity red flag.
- Commercial vehicle cyclicality is visible in the 52-week range and 1,000% profit swing; today's growth may reverse.
AI Analysis
SML Mahindra is a mixed case for me. The quality metrics look strong: 47.96% ROE, 27.12% ROCE, a manageable 0.56 debt/equity, and a Piotroski score of 7/9. Promoters own 58.97%, so alignment is real. The FairStock score of 47/100 says mixed, and I agree. The 62.53% sales growth and 1,000% profit growth are dramatic, but in commercial vehicles, I have learned to treat such figures as cyclical recovery, not durable compounding. The latest quarter anchors me: ₹539 Cr of sales produced only ₹18 Cr of net profit—a thin margin, hardly the earnings power that a 43.64 P/E and 16.37 P/B imply. At ₹3,916.80, against book value of ₹239.29, you are paying a huge premium for a business whose fortunes depend on the economic cycle, fuel costs, and infrastructure spending. The 52-week range, ₹2,749 to ₹5,987.90, shows how violent Mr. Market can be. I am also troubled that the reported free cash flow of ₹47.05 lakh Cr is absurd; if the data cannot be trusted, the analysis cannot either. A 0.38% dividend yield gives little downside support. The PEG of 0.08 only looks cheap if the 1,000% profit growth repeats forever—that is not how cyclical industries work. Graham would ask for a margin of safety. At this price, I see hope priced in, not protection. I would wait for a better price or for several quarters of consistent margins before acting.
Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer