Arex Industries Ltd Valuation Shifts Signal Renewed Price Attractiveness Amid Mixed Market Returns

Valuation Metrics Reflect Enhanced Price Appeal

As of 11 February 2026, Arex Industries trades at ₹140.60, down 4.97% from the previous close of ₹147.95. The stock’s 52-week range spans ₹128.30 to ₹175.00, indicating it is closer to its lower band, which often signals potential value for investors. The company’s P/E ratio currently stands at 28.59, a significant improvement in valuation attractiveness compared to many of its peers in the Garments & Apparels industry.

Notably, the price-to-book value ratio is 1.88, which is moderate and suggests the stock is not excessively priced relative to its net asset value. This contrasts sharply with several competitors such as R&B Denims and Sumeet Industries, whose P/E ratios exceed 46 and 77 respectively, and whose valuations are categorised as very expensive by market analysts.

Enterprise value to EBITDA (EV/EBITDA) for Arex Industries is 8.03, which is lower than many peers, indicating a more reasonable valuation relative to earnings before interest, tax, depreciation, and amortisation. This metric, combined with a PEG ratio of zero, reflects the absence of expected earnings growth priced into the stock, which may warrant caution but also highlights the potential for upside if growth materialises.

Comparative Industry Positioning

Within the Garments & Apparels sector, Arex Industries is rated as “very attractive” on valuation grounds, a notable upgrade from its previous “attractive” status. This upgrade was formalised on 19 June 2025, coinciding with a downgrade in its overall Mojo Grade from Sell to Strong Sell, reflecting a complex interplay between valuation and other fundamental factors.

Peer companies such as Himatsing. Seide also enjoy a “very attractive” valuation, with a P/E of 7.98 and EV/EBITDA of 8.68, but differ markedly in growth prospects and operational metrics. Conversely, companies like SBC Exports and Pashupati Cotsp. are classified as very expensive, with P/E ratios above 48 and 94 respectively, underscoring Arex’s relative value proposition.

Financial Performance and Returns Analysis

Arex Industries’ return on capital employed (ROCE) is 11.81%, while return on equity (ROE) is 6.58%. These figures indicate moderate efficiency in generating returns from capital and equity, though they lag behind some industry leaders. The absence of a dividend yield further emphasises the company’s focus on reinvestment or operational consolidation rather than shareholder payouts.

Examining stock returns relative to the Sensex reveals a mixed performance. Over the past week, Arex declined by 4.97% while the Sensex gained 0.64%. However, over longer horizons, Arex has outperformed the benchmark, delivering a 5-year return of 141.37% compared to Sensex’s 64.25%, and a 10-year return of 183.47% versus Sensex’s 254.70%. This suggests that while short-term volatility has impacted the stock, its long-term growth trajectory remains robust.

Mojo Score and Grade Implications

Arex Industries’ Mojo Score currently stands at 23.0, with a Mojo Grade of Strong Sell, downgraded from Sell on 19 June 2025. This rating reflects a cautious stance by market analysts, driven by concerns beyond valuation, including operational challenges or sector headwinds. The Market Cap Grade of 4 indicates a mid-tier market capitalisation, which may contribute to liquidity considerations and investor interest.

The divergence between valuation attractiveness and the Strong Sell grade highlights the importance of a holistic investment approach. While the stock’s price metrics suggest value, other factors such as earnings quality, competitive positioning, and sector dynamics weigh heavily on the overall recommendation.

Sector and Market Context

The Garments & Apparels sector has experienced varied performance amid global supply chain disruptions and shifting consumer demand patterns. Arex Industries’ valuation improvement may partly reflect market anticipation of stabilisation or recovery in these areas. However, the sector’s overall valuation landscape remains bifurcated, with several companies trading at premium multiples due to growth expectations or niche market positioning.

Investors should also consider macroeconomic factors impacting discretionary spending and export demand, which are critical to garment manufacturers. The company’s moderate ROCE and ROE suggest room for operational improvement, which could further enhance valuation if realised.

Investment Outlook and Considerations

For investors evaluating Arex Industries, the recent shift to a very attractive valuation grade offers a compelling entry point, especially given the stock’s proximity to its 52-week low. The P/E ratio of 28.59, while higher than some peers, is justified by the company’s stable earnings base and moderate capital returns.

However, the Strong Sell Mojo Grade and modest ROE caution against over-optimism. Potential investors should weigh the valuation appeal against operational risks and sector volatility. The absence of dividend yield further suggests that returns will primarily depend on capital appreciation rather than income generation.

Long-term investors may find value in Arex’s demonstrated ability to outperform the Sensex over five and ten-year horizons, but short-term traders should be mindful of recent price declines and market sentiment.

Summary

Arex Industries Ltd’s valuation parameters have improved significantly, with P/E and P/BV ratios now placing it among the more attractively priced stocks in the Garments & Apparels sector. Despite a recent share price decline and a Strong Sell rating, the company’s long-term returns and relative valuation suggest potential upside for discerning investors. Careful analysis of operational fundamentals and sector trends remains essential before committing capital.

Key Financial Metrics at a Glance

• P/E Ratio: 28.59
• Price to Book Value: 1.88
• EV/EBITDA: 8.03
• ROCE: 11.81%
• ROE: 6.58%
• Mojo Grade: Strong Sell (downgraded from Sell)
• Market Cap Grade: 4
• Current Price: ₹140.60
• 52-Week Range: ₹128.30 - ₹175.00

Investors should continue to monitor Arex Industries’ operational performance and sector developments to assess whether the improved valuation translates into sustainable gains.

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