Shankar Lal Ram. (SRD)

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

Key Financials

Strengths

• Promoter holding of 73.61% aligns owner-manager interests.
• ROCE of 14.08% indicates reasonably efficient use of capital.
• Latest quarter remains profitable with ₹2 crore net profit despite the slowdown.
• The stock has corrected sharply from its 52-week high of ₹91, reducing some speculative froth.

Concerns

• Sales growth of -11.14% and profit growth of -27.27% show clear business deterioration.
• Piotroski F-Score of 3/9 suggests poor financial health and operational stress.
• Valuation remains expensive at P/E 24.48 and P/B 2.85 despite falling earnings, with a negligible 0.12% dividend yield.
• Trading businesses typically lack pricing power or durable moats, making them vulnerable to cyclical downturns.

AI Analysis

Let me look at Shankar Lal Ram as a business, not a ticker. It is a chemical trader with ₹91 crore in latest quarter sales and only ₹2 crore net profit—an operating margin around 2%. This is inherently a low-margin, price-taking business. In a commodity trading environment, you are at the mercy of chemical prices and demand. Sales are down 11.14% and profits fell 27.27%; that tells me the business is shrinking, not compounding. A P/E of 24.48 for a company with declining earnings is hardly a bargain. At ₹44.33, I am paying 2.85 times book value of ₹15.58, but book value matters less for a distributor with no pricing power. The Piotroski F-Score of 3 out of 9 raises red flags about financial health; the latest quarter's profit is only ₹2 crore, so quality is deteriorating. The 0.12% dividend means I get almost no return while waiting. On the positive side, ROCE of 14.08% is respectable, and promoter holding of 73.61% at least aligns owners with management. But high ownership doesn't create a moat. The stock has fallen from ₹91 to ₹44.33, yet the earning power has also fallen. In Graham's language, price is what you pay, value is what you get. Here I don't see a margin of safety. This is a cyclical trading business in a down phase; unless I see sales and margins stabilise and evidence of pricing power, I would rather watch from the sidelines. Chemistry is not my edge; simple economics are.

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