Ahluwalia Contracts (India) Ltd: Valuation Shift Signals Renewed Price Attractiveness

Valuation Metrics: A Closer Look

As of 10 Feb 2026, Ahluwalia Contracts trades at a price of ₹896.80, up 4.64% from the previous close of ₹857.00. The company’s price-to-earnings (P/E) ratio currently stands at 22.88, a figure that has moderated from previous levels but remains within an attractive range when benchmarked against sector peers. The price-to-book value (P/BV) ratio is 3.12, signalling a premium over book value but still reflective of investor confidence in the company’s asset utilisation and growth prospects.

Other valuation multiples include an enterprise value to EBIT (EV/EBIT) of 14.65 and an EV to EBITDA of 11.94, both indicative of a balanced valuation relative to earnings before interest and taxes and earnings before interest, taxes, depreciation and amortisation, respectively. The EV to capital employed ratio is 5.21, while EV to sales is 1.16, underscoring efficient capital deployment and revenue generation.

The PEG ratio, a key indicator of valuation relative to earnings growth, is notably low at 0.65, suggesting that the stock is undervalued relative to its growth trajectory. Dividend yield remains modest at 0.07%, consistent with the company’s reinvestment strategy to fuel expansion.

Operational Efficiency and Returns

Ahluwalia Contracts boasts a return on capital employed (ROCE) of 35.56%, a robust figure that highlights the company’s ability to generate profits from its capital base. Return on equity (ROE) is 13.65%, reflecting solid shareholder returns. These metrics reinforce the company’s operational strength and justify the premium valuation multiples relative to some peers.

Comparative Valuation: Peer Benchmarking

When compared with key industry players, Ahluwalia Contracts’ valuation appears attractive. For instance, IRB Infrastructure Developers trades at a P/E of 30.45 and is rated as expensive, while Jyoti CNC Automation and Schneider Electric India are classified as very expensive with P/E ratios of 56.54 and 74.68 respectively. Other peers such as Afcons Infrastructure and Cemindia Projects also hold attractive valuations but with slightly higher P/E ratios of 24.97 and 23.42.

Notably, G R Infraproject stands out as very attractive with a P/E of 9.21, but this is balanced against its operational scale and market positioning. NCC, another peer, is attractive with a P/E of 13.28. Ahluwalia’s valuation thus sits comfortably within the attractive band, supported by its strong fundamentals and growth outlook.

Price Performance and Market Context

Ahluwalia Contracts has outperformed the Sensex over multiple time horizons. The stock delivered a 7.18% return over the past week compared to the Sensex’s 2.94%. Although it experienced a 2.76% decline over the last month against a 0.59% gain in the benchmark, the year-to-date return of -8.56% is only marginally worse than the Sensex’s -1.36%. Over longer periods, the stock has significantly outpaced the market, with a 19.57% return over one year versus 7.97% for the Sensex, and an impressive 194.03% gain over five years compared to 63.78% for the benchmark.

The 52-week trading range of ₹620.65 to ₹1,129.20 reflects considerable volatility, yet the current price near ₹897 suggests a recovery phase with potential upside as market conditions stabilise.

Mojo Score and Rating Revision

MarketsMOJO’s proprietary scoring system currently assigns Ahluwalia Contracts a Mojo Score of 56.0, corresponding to a Hold rating. This marks a downgrade from a previous Strong Buy rating as of 20 Jan 2026, reflecting the recent valuation adjustment and evolving risk-reward profile. The market capitalisation grade remains at 3, indicating a mid-tier size within the construction sector.

This rating revision signals a more cautious stance, balancing the company’s strong operational metrics against the tempered valuation appeal and broader market uncertainties.

Valuation Trends and Investor Implications

The shift from very attractive to attractive valuation grade is primarily driven by the P/E ratio settling at 22.88, which, while still reasonable, is higher than historical lows. The P/BV ratio of 3.12 also suggests that investors are willing to pay a premium for the company’s growth and return profile, but this premium has compressed slightly from prior levels.

Investors should note that the PEG ratio of 0.65 remains compelling, indicating that earnings growth expectations justify the current price. However, the modest dividend yield of 0.07% may deter income-focused investors, positioning Ahluwalia more as a growth-oriented investment.

Given the company’s strong ROCE and ROE, alongside a valuation that remains attractive relative to peers, the stock presents a balanced opportunity. The recent price appreciation and positive weekly returns suggest renewed investor interest, but the downgrade in rating advises prudence amid potential volatility.

Sector Outlook and Market Positioning

The construction sector continues to benefit from government infrastructure initiatives and private sector investments, providing a favourable backdrop for companies like Ahluwalia Contracts. The company’s strong execution capabilities and healthy return ratios position it well to capitalise on upcoming projects.

However, rising input costs and competitive pressures remain challenges that could impact margins and valuation multiples. Investors should monitor quarterly earnings and order book updates closely to gauge the sustainability of growth and profitability.

Conclusion: Balanced Valuation with Growth Potential

In summary, Ahluwalia Contracts (India) Ltd’s valuation adjustment from very attractive to attractive reflects a maturing price level that still offers reasonable upside relative to peers. The company’s strong operational metrics, including a 35.56% ROCE and a PEG ratio below 1, support a positive medium-term outlook.

While the downgrade in Mojo Grade to Hold advises caution, the stock’s outperformance against the Sensex over longer periods and recent positive price momentum suggest that it remains a viable option for investors seeking exposure to the construction sector’s growth story. Careful monitoring of valuation trends and sector developments will be key to realising potential gains.

Upgrade at special rates, valid only for the next few days. Claim Your Special Rate →