FACT - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 2.7

📊 Financials Overview:

• Revenue & Profit Growth: PAT rose from 4.28 Cr. to 20.9 Cr. (↑ 86.4%), but earnings remain small relative to market cap.
• Margins: ROCE at 8.65% and ROE at 1.61% show weak profitability and poor capital efficiency.
• Debt Ratios: Debt-to-equity at 2.79 indicates high leverage, raising financial risk.
• Cash Flows: Dividend yield at 0.02% is negligible, offering minimal shareholder returns.

💹 Valuation Indicators:

• P/E Ratio: 616 vs Industry PE of 20.3 → extremely overvalued.
• P/B Ratio: Current Price / Book Value ≈ 40.7, highly expensive relative to fundamentals.
• PEG Ratio: -9.78 → negative, suggesting unsustainable valuation relative to growth.
• Intrinsic Value: Fair value estimated near 500–600 ₹; current price (864 ₹) trades at a steep premium.

🏭 Business Model & Competitive Advantage:

• FACT operates in fertilizers and chemicals, benefiting from government support and agricultural demand.
• Large market capitalization provides scale, but profitability remains weak.
• High debt and poor return metrics limit competitive strength.

📈 Entry Zone & Long-Term Guidance:

• Entry Zone: Attractive accumulation range between 500–600 ₹.
• Long-Term Holding: High-risk investment; valuations stretched and returns weak despite recent profit growth.

Positive

• Quarterly PAT growth of 86.4% shows earnings momentum.
• FII holdings increased slightly (+0.01%), showing minor foreign investor interest.
• Strong presence in fertilizer and chemical sector with government backing.

Limitation

• Extremely high P/E ratio (616) compared to industry average (20.3).
• Weak ROE (1.61%) and ROCE (8.65%) indicate poor capital efficiency.
• Debt-to-equity at 2.79 is high, raising financial risk.
• Dividend yield at 0.02% is negligible.
• DII holdings declined significantly (-8.56%), showing reduced domestic institutional confidence.

Company Negative News

• No major negative news reported; valuation premium and weak return metrics remain key concerns.

Company Positive News

• Quarterly PAT growth of 86.4% highlights operational improvement.
• Minor increase in FII holdings reflects some foreign investor confidence.

Industry

• Industry PE at 20.3, far lower than FACT’s 616.
• Sector growth driven by agricultural demand and government subsidies for fertilizers.

Conclusion

⚖️ FACT shows strong short-term profit growth but suffers from weak return metrics, high debt, and extreme overvaluation. While government support provides stability, the stock trades at a steep premium compared to industry averages. Long-term investors should only consider entry near 500–600 ₹ for margin of safety, while current levels pose significant valuation risks despite sector demand.