🧠 1. At a Glance
Quality RO Industries Ltd is trying to be everything everywhere all at once—RO filters, real estate, logistics, die-casting, and more. In SME land, that’s either genius diversification or a recipe for chaos. With ₹16 Cr in annual revenue and ₹1.73 Cr profit in FY25, it boasts an 18% ROCE but a stock down 38% from peak. Let’s decode this water-filter-cum-construction-cum-logistics stock.
🎬 2. Hook – “RO ka IPO, Real Estate ka Jugaad?”
When a company manufactures RO membranes, trades spare parts, hauls freight for nearby factories, and casually builds residential properties in Gujarat, you know you’re not in Kansas anymore. The financials show steady profit growth… but can such a fragmented business ever scale?
🏭 3. WTF Do They Even Do?
Quality RO has 5 business segments:
- 🧪 RO Manufacturing – Spun filters, membrane housings, etc.
- 🏭 Contract Manufacturing – Die-casting work for third-party clients
- 🛠️ Trading – RO and allied components
- 🚛 Logistics Services – Local trucking for industrial clients
- 🏢 Real Estate – Residential & commercial project development
It’s like they took “diversification” too literally. RO business is the core, but real estate seems opportunistic.
📊 4. Financials – Filtered for Clarity
| Metric (FY25) | Value |
|---|---|
| Revenue | ₹16 Cr |
| Net Profit | ₹1.73 Cr |
| EBITDA Margin | 20% |
| ROE | 16.2% |
| ROCE | 18.6% |
| EPS | ₹8.96 |
🔸 3-year Revenue CAGR: 21%
🔸 3-year Profit CAGR: 11%
🔸 Solid margins. Tiny scale.
💰 5. Valuation – Cheap, Meh, or Crack?
- CMP: ₹150
- P/E: 22.1
- Book Value: ₹59.6
- Price/BV: 2.52x
EduFair Value Range™
- FY25 EPS ₹8.96 × 15–18x = ₹135 – ₹160
- FV Range = ₹130 – ₹160
➡️ CMP is slightly above the midpoint, valuation looks okay if growth continues.
🔥 6. What’s Cooking – News, Triggers, Drama
- FY25 net profit up 11% YoY
- OPM expanded to 20% despite higher costs
- Promoter holding fell 12.9% in 3 years 😬
- Inventory Days rising—now 300 days 😑
- No dividends. No fresh project announcements.
- Logistics & Real Estate contribute less than 30% combined.
Nothing spicy. No capex buzz or tie-ups. Steady but silent.
🧾 7. Balance Sheet – How Much Debt, How Many Dreams?
| FY25 Metric | Value |
|---|---|
| Debt | ₹6.39 Cr |
| Equity + Reserves | ₹11.5 Cr |
| D/E Ratio | 0.55x |
| Fixed Assets | ₹1.66 Cr |
| Total Assets | ₹19.59 Cr |
Balance sheet is manageable, but growth will need more capital. Also, asset base is small for real estate aspirations.
💸 8. Cash Flow – Sab Number Game Hai
| FY | CFO ₹ Cr | FCF? |
|---|---|---|
| FY23 | -1.67 | ❌ |
| FY24 | -1.93 | ❌ |
| FY25 | -3.93 | ❌❌ |
Negative operating cash flow every year. Profit is there, but no cash conversion. Classic SME trap?
📐 9. Ratios – Sexy or Stressy?
| Ratio | FY25 | Comment |
|---|---|---|
| ROE | 16.2% | Solid ✅ |
| ROCE | 18.6% | High ✅ |
| OPM | 20.0% | Strong ✅ |
| CCC | 347 days | 😬 Very High |
| Inventory Days | 299 days | 🚩 |
Margins are strong, but working capital is stuck in inventory.
💵 10. P&L Breakdown – Show Me the Money
| FY | Revenue (₹ Cr) | PAT (₹ Cr) | OPM % |
|---|---|---|---|
| FY23 | 5.52 | -0.02 | 13% |
| FY24 | 13.22 | 1.56 | 20% |
| FY25 | 16.00 | 1.73 | 20% |
Growth slowing down. From 139% jump in FY24 to just ~20% in FY25.
🤼 11. Peer Comparison – Who Else in the Game?
| Name | P/E | ROE % | OPM % | CMP/BV |
|---|---|---|---|---|
| Kaynes Tech | 139x | 11% | 15% | 13.75x |
| Jyoti CNC | 75x | 21% | 27% | 14.45x |
| Tega Industries | 51x | 15.5% | 21% | 7.36x |
| Quality RO | 22x | 16.2% | 20% | 2.52x |
➡️ Looks cheap vs peers, but they’re all large-scale players.
➡️ Real comparison would be with other BSE-SME stocks, where QRO trades in the mid-range.
🧬 12. Misc – Shareholding, Promoters
- Promoter Holding down from 61% → 48%
- No known institutional ownership
- Just 98 shareholders 👀
- Zero dividends since inception
🚨 Promoter selling + low liquidity = tread carefully
🧠 13. EduInvesting Verdict™
Quality RO is like a school kid who signs up for every club—debate, cricket, drama, chess—and does decently in all, but isn’t a standout anywhere.
✅ RO business = decent margins
✅ Real estate = optional lottery
🚫 Cash flows = weak
🚫 Promoter confidence = slowly slipping
🧮 Fair Value: ₹130–₹160
📉 CMP: ₹150 (mid-range)
🎯 Verdict: “Watch-only until cash flow and focus improve”
✍️ Written by Prashant | 📅 July 1, 2025
Tags: Quality RO Industries, SME stocks, water filter business, logistics stocks, real estate SME, SME IPO, ROCE 18%, EduInvesting
