Zenith Drugs (ZENITHDRUG)

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

Key Financials

Strengths

• Sales growth of 15.56% shows the business is still expanding at the top line.
• Promoter holding of 69.98% suggests strong owner alignment.
• ROCE of 12.90% indicates acceptable capital efficiency despite the profit decline.
• Latest quarterly sales of ₹78 crore against a market cap of ₹85 crore implies a modest revenue base relative to valuation.

Concerns

• Profit growth has fallen 55.24%, with latest quarterly net profit of only ₹2 crore on ₹78 crore sales, implying a thin 2.6% net margin.
• Piotroski F-score of 4/9 points to weak financial health and deteriorating fundamentals.
• No dividend and no available book value, ROE, or debt-to-equity data, leaving an insufficient margin of safety.
• P/E of 19.97 with declining earnings could be misleading and may signal a value trap if profits keep falling.

AI Analysis

Zenith Drugs is a small pharmaceutical business with a market cap of only ₹85 crore, and the first thing I notice is the lack of data. Graham taught me to demand a margin of safety, and with no book value, no return on equity, and no debt-to-equity ratio, I cannot calculate the real protection for my capital. The latest quarter shows sales of ₹78 crore and net profit of only ₹2 crore — a margin of roughly 2.6%, which is thin for a pharma company. Profit growth has collapsed by 55.24% even while sales grew 15.56%. That tells me the company's cost structure or pricing is under pressure, and the P/E of 19.97 is not cheap when earnings are falling. A PEG of 1.28 looks reasonable only if you use the sales growth, but Graham would never substitute sales growth for earnings growth. The Piotroski F-score of 4 out of 9 is weak, signalling deteriorating financial fundamentals. On the positive side, promoter holding of 69.98% is high, which usually means owners are aligned with shareholders. ROCE of 12.90% is acceptable, though not outstanding. There is no dividend, so I earn nothing while I wait. The share trades at ₹44.20, far below the 52-week high of ₹76.00, but that alone does not make it a bargain. This looks like a turnaround situation: the sales engine is still moving, but profits have stalled badly. I would not buy without seeing a few quarters of margin recovery and evidence that the profit decline has reversed. In the absence of critical balance-sheet data, this remains a speculator's stock, not an investor's.

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