Ugar Sugar Works (UGARSUGAR)

FairStock Score: 33/100 — RISKY

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

Key Financials

Strengths

• Revenue growth of 22.23% and latest quarterly sales of ₹321 Cr show strong momentum.
• Piotroski F-Score of 7/9 indicates improving fundamentals, including profitability and operational efficiency.
• Profit growth of 203.75% and latest quarterly net profit of ₹14 Cr suggest a recovery from a cyclical trough.
• Promoter holding of 46.75% provides meaningful insider alignment with minority shareholders.

Concerns

• Debt/Equity of 2.56 is high, increasing financial risk in a commodity business.
• ROCE of 3.14% is very low, indicating weak returns on capital after financing costs.
• Dividend yield of 0.00% means all returns must come from price appreciation, with no income cushion.
• P/B of 3.04 means paying over three times book value for an 11.78% ROE business, leaving little margin of safety.

AI Analysis

Looking at Ugar Sugar, I first ask: what kind of business am I buying? Sugar is a commodity, and the numbers confirm no wide moat. ROCE is just 3.14%; with debt/equity at 2.56, that return is thin for the risk. A leveraged commodity producer is not a business I can predict with certainty. However, I see green shoots: sales up 22.23%, and profit grew 203.75% from a low base. Last quarter's net profit of ₹14 Cr on sales of ₹321 Cr is a respectable margin for sugar. The Piotroski score of 7/9 signals improving fundamentals. But I must discipline myself. Book value is ₹14.25; at ₹43.35, I pay 3.04 times book for an 11.78% ROE business. That is not a Graham bargain unless growth and margins persist. The PEG of 0.19 seems seductive, but earnings growth of 203.75% is cyclical recovery, not normal compounding. Sugar prices and policy swing sharply; high debt leaves little cushion. With no dividend, minority shareholder returns depend entirely on management and the commodity cycle. Promoter holding of 46.75% aligns interests, but leverage still worries me. I would not call this a stalwart; it is a cyclical. Buffett would say: be fearful when others are greedy? At a P/E of 21.73 and P/B of 3.04, the market is already paying for a good year. I need margin of safety. With debt/equity at 2.56 and ROCE at 3.14%, I would wait for either a lower valuation or demonstrated debt reduction. Let the numbers prove durability before I commit.

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