Vadilal Inds. (VADILALIND)

FairStock Score: 41/100 — MIXED

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

Key Financials

Strengths

• Return on capital employed is strong at 25.11%, indicating efficient use of capital.
• Low debt/equity of 0.26 provides financial flexibility and reduces balance sheet risk.
• Sales growth of 16.76% shows the business still has demand momentum.
• Promoter holding of 64.72% aligns management's interests with minority shareholders.

Concerns

• Profit growth is -101.34% with latest quarter net profit essentially zero, showing severe earnings deterioration.
• Piotroski F-score of 4/9 points to weak fundamental health and operational stress.
• Valuation is rich at P/E of 29.08 and P/B of 6.99, offering little margin of safety.
• Dividend yield of only 0.42% means investors are not paid to wait through the uncertainty.

AI Analysis

When I study Vadilal, I don't start with price; I start with earnings. ROCE at 25.11% and debt/equity at 0.26 tell me this is a business with capital discipline and a reasonable balance sheet. Promoter holding of 64.72% is also comforting. But Graham taught me that price is what you pay, value is what you get. At ₹4,552.60, the market cap is ₹3,555 Cr, which is 29 times trailing earnings and nearly 7 times book value. For that premium, I expect dependable profit growth. Instead, profit growth is -101.34%, and the latest quarter's net profit is essentially ₹0 Cr. That is not a business compounding value; that is a business hitting a speed bump. The Piotroski score of 4/9 reinforces my caution. Sales growth of 16.76% is nice, but if revenues do not flow to the bottom line, the value proposition weakens. The stock has fallen from ₹8,447 to its current level, yet a falling knife can still be too expensive. With book value at ₹651.50, the downside protection is thin. Dividend yield of 0.42% does not compensate me while I wait for a recovery. This could be a good franchise in a tough phase, and I admire the high ROCE. But I cannot justify paying a growth premium when net profit is near zero and the F-score is weak. In Buffett's terms, a wonderful business must be bought at a sensible price; today, Vadilal offers promise, not proof. I need to see consistent quarterly profits, improving F-score, and clearer visibility before I deploy capital. Until then, I would classify it as a potential turnaround and keep it on my watchlist.

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