Techno Elec.Engg (TECHNOE)

FairStock Score: 60/100 — STEADY

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

Key Financials

Strengths

• Robust top-line momentum: sales grew 61.55% and 5-year revenue CAGR is 20.75%.
• Very low leverage with D/E of 0.02 and strong Altman Z of 3.25.
• Promoter holding of 56.93% aligns management interest with shareholders.
• Healthy operational returns: ROCE 16.54%, ROE 13.21%, and EV/EBITDA 9.79.
• Piotroski F-Score of 8/9 indicates good financial health.

Concerns

• Negative free cash flow of ₹-1,177 Cr raises questions about earnings quality and cash conversion.
• Valuation is far above conservative intrinsic value; Graham Number ₹569.32 and given margin of safety -106.07%.
• Profit growth at 35.03% is trailing sales growth, indicating margin pressure or higher costs.
• Low dividend yield of 0.77% offers little income while waiting for growth; P/E 29.10 and P/B 3.89 require high expectations.

AI Analysis

Techno Engineering presents an interesting tension between a wonderful growth story and a price I struggle to call a bargain. Buffett would say it's far better to buy a wonderful business at a fair price, but this may not be a wonderful business at a wonderful price. The numbers: sales grew 61.55% and profits 35.03%, with a 5-year revenue CAGR of 20.75%. That is a fast grower in the civil construction space. I like the low debt: D/E 0.02, and a promoter holding of 56.93% aligns owners with minority shareholders. ROCE at 16.54% and ROE at 13.21% are decent, though not extraordinary for a business growing this quickly. The Piotroski score of 8/9 and Altman Z of 3.25 suggest the balance sheet is not under stress despite expansion. But I cannot ignore the gap between reported profits and cash. Free cash flow is minus ₹1,177 crore, a serious red flag. A business can report growing earnings while consuming capital, and in construction that often means working capital tied up in receivables and inventories. My Graham-based intrinsic measure—the Graham Number—stands at ₹569.32, while the market price is ₹1,249.25. That gives me a negative margin of safety near -106%. At 29 times earnings and 3.89 times book, I am paying far more than a conservative value investor should. The PEG ratio of 0.47 argues the growth makes it less expensive, but I need to be careful with forward-looking PEGs built on one year's burst. The dividend yield of 0.77% is minimal; I rely on earnings growth and cash generation for returns. The latest quarter shows sales ₹872 Cr and net profit ₹119 Cr, healthy, but I must watch whether that converts to cash. I would not buy here with my capital, but I would keep it on my watchlist.

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