SRM Contractors (SRM)

FairStock Score: 56/100 — STEADY

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

Key Financials

Strengths

• ROE at 32.45% and ROCE at 33.20% show very efficient use of capital.
• Low leverage with Debt/Equity of 0.20 provides financial cushion.
• Sales growth of 53.69% and profit growth of 50.62% demonstrate strong momentum.
• P/E of 11.80 and PEG of 0.23 make the growth look reasonably priced.
• Promoter holding of 72.59% aligns interests with minority shareholders.

Concerns

• P/B of 5.35 against book value of ₹100.36 leaves little asset-based margin of safety.
• Zero dividend yield means all returns depend on future growth and re-rating.
• Civil construction is cyclical and competitive; 53.69% sales growth may not be sustainable.
• Small market cap of ₹956 Cr with a 27% public float can lead to volatility and liquidity risk.

AI Analysis

Let me start with what I can understand. SRM Contractors builds civil infrastructure — not a wonderful franchise, but a straightforward business. The numbers make me stop. A 32.45% ROE and 33.20% ROCE tell me this management knows how to put capital to work. Debt is low: debt/equity is just 0.20. With 72.59% promoter ownership, the people running it have their own money at stake. Sales rose 53.69% and profit 50.62%; a PEG ratio of 0.23 suggests the market is pricing in very little of this growth. At ₹537.10, the stock trades at 11.80 times earnings — reasonable for a company expanding at this pace. The latest quarter adds support: sales of ₹231 Cr and net profit of ₹24 Cr. But I must also listen to Graham. Book value is ₹100.36, so I am paying 5.35 times book. That is not an asset bargain. There is no dividend, so I must rely on growth and market re-rating. Civil construction is cyclical and competitive; today's 53.69% sales growth will not repeat forever. The Piotroski F-Score of 7 out of 9 is reassuring, and the FairStock score calls it steady, but a 956-crore market cap with a 27% float can be volatile. Would I buy the whole company at this price? At 11.8 times earnings with high returns and low debt, I can be interested. But I need to watch whether the growth is durable, whether the balance sheet stays clean, and whether the promoters keep adding or start selling. If the growth fades, the multiple on book will punish me. For now, this is a fast grower, not a stalwart — and I will size it accordingly.

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