Swan Corp (SWANCORP)

FairStock Score: 4/100 — RISKY

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

Key Financials

Strengths

• Five-year revenue CAGR of 72.85% shows the business had a strong upcycle and can grow rapidly when petrochemical conditions are favourable.
• Free cash flow of ₹817 Cr was positive even in a loss-making quarter, suggesting some cash protection at the trough.
• Debt/equity of 0.34 gives Swan Corp a relatively conservative balance sheet.
• Promoter holding of 53.96% aligns management with minority shareholders.

Concerns

• Latest quarter net profit is -₹1 Cr and profit growth is -101.69%, making the reported P/E of 0.00 meaningless and leaving no earnings to support the price.
• ROE of -0.17% and ROCE of -1.44% mean the company is destroying value; the Piotroski F-score of 2/9 reinforces poor financial health.
• Altman Z-score of 1.40 is in the distress zone, and EV/EBITDA of 707.13 shows an extreme valuation relative to operating earnings.
• DCF intrinsic value of -₹0.39 and sales decline of -20.49% mean there is no margin of safety at ₹340.95.

AI Analysis

Let me start with the obvious: a reported P/E of 0.00 is not a bargain; it is an absence of earnings. Swan Corp's latest quarterly net profit is -₹1 Cr on ₹1,150 Cr of sales, and profit growth has collapsed by 101.69%. My first rule is don't lose money; a company earning -0.17% ROE and -1.44% ROCE is destroying value, not compounding it. The petrochemical business is inherently cyclical, and this looks like the downcycle: sales fell 20.49%, and the Piotroski F-score is a weak 2/9. Altman Z of 1.40 puts it in distress territory. When I see EV/EBITDA of 707.13, the market is paying an absurd multiple for almost no operating earnings. The DCF value is -₹0.39, so on cash flows there is no margin of safety. Yet I must be fair. The company is not drowning in debt—D/E is 0.34—and it generated ₹817 Cr of free cash flow even as profits were negative. Promoters own 53.96%, so their interests are aligned with mine. Five-year revenue CAGR of 72.85% proves that in the last upcycle the business grew impressively. But as Buffett says, when management is that good at growing sales, you still need the business to earn more than capital cost. Right now it fails. Book value is ₹234.25, and I am being asked to pay ₹340.95, 1.46 times book, for a cyclically impaired asset with no current earnings. That offers no margin of safety. I would call this a cyclical, not a turnaround, until I see ROCE turn positive and sales stabilize. My circle of competence says: wait for the cycle to turn, then value it on normalized earnings, not today's bottom.

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