Zim Laboratories (ZIMLAB)

FairStock Score: 15/100 — RISKY

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

Key Financials

Strengths

• Sales growth of 12.8% shows moderate demand traction in a competitive pharma space.
• Piotroski F-Score of 7/9 indicates recent fundamentals are reasonably sound across profitability, leverage, and efficiency.
• Debt-to-equity of 0.49 suggests the balance sheet is not excessively leveraged.
• Latest quarter revenue of ₹109 Cr demonstrates a meaningful operating scale relative to the market cap.

Concerns

• ROE of just 3.46% and ROCE of 8.16% show weak capital efficiency and limited value creation.
• P/E of 53.38 and PEG of 4.68 make the valuation far too rich for 10% profit growth.
• No dividend means investors receive zero income while waiting for uncertain growth.
• Promoter holding of only 33.26% raises questions about long-term alignment and commitment.

AI Analysis

I have always said it is far better to buy a wonderful business at a fair price than a fair business at a wonderful price. Zim Laboratories, at quick glance, tests my patience. The company sells at ₹84.37, a P/E of 53.38, despite earning a return on equity of just 3.46% and return on capital of 8.16%. A business that cannot generate more than ₹3.50 for every ₹100 of equity is not compounding wealth; it is tying up capital. The balance sheet is not reckless, with debt-equity at 0.49, and the Piotroski score of 7 suggests recent fundamentals are okay. Sales grew 12.8% and profit 10%, but the price already pays for far more. At PEG of 4.68, even the optimist's case is overstretched. The latest quarter – ₹109 Cr sales and ₹4 Cr net profit – shows a thin net margin near 3.7%. That is not the kind of durable economics I search for. There is no dividend to reward me while I wait, and promoter holding at 33.26% is not a comfort. Book value at ₹49.25 means I am paying 1.71 times assets, but with such low returns, that book value growth will be slow. Mr. Market has marked the stock down from ₹133.95 to ₹84.37; that may look tempting, but a falling price does not automatically create a bargain. Without clear evidence that returns on capital are improving, this remains a slow grower in a competitive pharmaceutical market. I would need a much lower price or a demonstrated jump in profitability before I commit capital. Patience, not price, is my edge.

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