ACI Infocom Ltd (Share Price - Rs.9.60)(517356): Avoid (10 Step Process To Confirm If Its A Buy)
Valuation: Overvalued with trailing PE of 438x.
Reason to Avoid: The company has low promoters holdings of 20.66%. The company's business is earning revenue but not able to maintain margin which results in very low earnings.
Drivers: the company is into IT hardware (manufacturing floppy disc) which is out of pace on account of new technology. Also, the company forays into real estate segment with small and mid-size projects on records but yet to pace up with current competitors in markets.
Financials: The company has very low ROCE and in ROE in the range of ~1% since last five years. The company has low cash in hand up to Rs.0.06 crores as of now which does not provide enough safety cushion.