Star Paper Mills (STARPAPER)

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

Key Financials

Strengths

• Trades at 0.34x book value, a 66% discount to ₹424.81 book value
• Near-zero debt with Debt/Equity of 0.01 provides strong financial stability
• Low P/E of 5.60 and PEG of 0.85 offer a margin of safety if earnings hold
• Promoter holding of 44.93% aligns ownership with minority shareholders
• Piotroski F-score of 6/9 indicates reasonable financial health

Concerns

• Sales growth is negative at -5.81%, showing a shrinking top line
• Low ROE of 5.84% and ROCE of 7.76% suggest weak capital efficiency
• Paper is cyclical and capital-intensive; no clear moat against larger or cheaper producers
• FairStock Score is N/A due to insufficient data, limiting analytical confidence

AI Analysis

At ₹145.79, Star Paper Mills is the kind of stock Ben Graham would have circled in the stock list. The market cap is just ₹219 Cr while book value stands at ₹424.81 per share, meaning I am paying only 34 paise for every rupee of net assets. That is a deep margin of safety if the assets are real and earning power is not permanently broken. The balance sheet is fortress-like: debt-to-equity of 0.01, and the company still pays a 2.50% dividend while retaining earnings. A P/E of 5.60 and a PEG of 0.85 suggest the market is pricing in stagnation or worse. But I must be careful. A cheap stock can be a value trap. Paper is a cyclical, capital-intensive commodity business. Star's sales declined 5.81%, and returns are mediocre: ROE of 5.84% and ROCE of 7.76%. That is not a wonderful franchise; it is a mediocre capital allocator rescued by low expectations. The latest quarter, though, showed net profit of ₹8 Cr on sales of ₹92 Cr, so demand has not collapsed. Profit growth of 6.61% even as sales fell suggests some cost discipline or better product mix. I like that promoters hold 44.93%, aligning interests, and a Piotroski F-score of 6/9 indicates decent financial health, not perfection. The absence of a FairStock Score due to insufficient data reminds me to do more homework before acting. This is not a growth story. It is an asset play, perhaps a cyclical one. I need to see stable or growing sales, consistent operating margins, and evidence that book value is being deployed to earn higher returns. Until then, I would treat this as a cigar butt—one puff or two, not a permanent holding.

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