Arihant Capital Markets Ltd: Valuation Shifts Signal Renewed Price Attractiveness

Valuation Metrics Signal Enhanced Price Appeal

The latest data reveals that Arihant Capital’s price-to-earnings (P/E) ratio stands at 21.03, a level that positions the stock favourably within the capital markets sector. This P/E is notably lower than several peers classified as very expensive, such as Mufin Green with a P/E of 110.82 and Ashika Credit at 170.6. The company’s price-to-book value (P/BV) is 1.96, which further underscores its reasonable valuation compared to sector averages.

Enterprise value multiples also paint a compelling picture. Arihant’s EV to EBIT ratio is 8.47, and EV to EBITDA is 8.08, both metrics indicating a valuation discount relative to peers like Mufin Green (EV/EBITDA 22.34) and Saraswati Commercial (EV/EBITDA 45.67). These multiples suggest that the market is currently pricing Arihant Capital at a more conservative level, potentially offering upside if operational performance sustains or improves.

Strong Operational Returns Support Valuation

Beyond valuation, Arihant Capital’s return metrics bolster its investment case. The company’s return on capital employed (ROCE) is an impressive 36.64%, signalling efficient use of capital to generate earnings. Meanwhile, return on equity (ROE) stands at 10.43%, a respectable figure that, while moderate, reflects steady profitability for shareholders.

Dividend yield remains modest at 0.64%, consistent with the company’s growth orientation and capital reinvestment strategy. The PEG ratio is reported as zero, indicating either a lack of meaningful earnings growth projections or a data anomaly; however, the overall valuation remains compelling given the other metrics.

Comparative Analysis with Peers

When benchmarked against its peer group within the capital markets sector, Arihant Capital’s valuation stands out as very attractive. Several competitors are classified as very expensive or risky, with some companies reporting losses that distort valuation metrics. For instance, Arman Financial and LKP Finance are loss-making, rendering their valuation multiples less meaningful.

In contrast, Arihant’s positive earnings and solid multiples provide a clearer picture of value. Satin Creditcare and SMC Global Securities, both rated attractive, have P/E ratios of 8.92 and 21.39 respectively, placing Arihant Capital in a competitive position given its very attractive rating. This relative valuation advantage may appeal to investors seeking exposure to the capital markets sector without the premium paid for riskier or overvalued names.

Stock Price and Market Performance Overview

At the time of analysis, Arihant Capital’s stock price is ₹77.70, down slightly from the previous close of ₹78.30. The 52-week trading range spans from ₹56.31 to ₹120.35, indicating significant volatility and potential for price recovery. Today’s intraday range was ₹76.65 to ₹79.89, reflecting moderate trading activity.

However, the stock’s recent returns have lagged broader market benchmarks. Over the past week, Arihant Capital declined by 4.83%, while the Sensex gained 0.50%. The one-month return shows a sharper contrast, with the stock down 15.13% against a 0.79% rise in the Sensex. Year-to-date, the stock is down 13.57%, whereas the Sensex is marginally negative at -1.16%.

Long-Term Returns Outperform Market Benchmarks

Despite recent underperformance, Arihant Capital’s long-term returns have been exceptional. Over three years, the stock has delivered a 64.44% return compared to the Sensex’s 38.81%. The five-year return is even more striking at 358.68%, vastly outpacing the Sensex’s 63.46%. Over a decade, the stock has surged by an extraordinary 1,867.09%, dwarfing the Sensex’s 267.00% gain.

This long-term outperformance highlights the company’s ability to generate shareholder value over extended periods, reinforcing the argument for its current valuation attractiveness. Investors with a longer investment horizon may find Arihant Capital’s valuation and growth profile compelling despite short-term volatility.

Mojo Score and Rating Update

MarketsMOJO assigns Arihant Capital a Mojo Score of 31.0, reflecting a cautious stance on the stock. The Mojo Grade has been upgraded from Strong Sell to Sell as of 11 February 2026, signalling a modest improvement in the company’s outlook. The market capitalisation grade remains low at 4, consistent with its micro-cap status and associated liquidity considerations.

The downgrade in the Mojo Grade earlier reflected concerns over valuation and operational risks, but the recent shift to Sell indicates that the valuation parameters have improved sufficiently to warrant a less negative view. Investors should weigh this rating alongside fundamental metrics and sector trends before making decisions.

Sector and Industry Context

Arihant Capital operates within the capital markets sector, a space characterised by cyclical earnings and sensitivity to macroeconomic factors. The sector has seen a divergence in valuations, with some companies trading at stretched multiples due to growth expectations, while others face challenges from regulatory changes or credit risks.

In this environment, Arihant Capital’s very attractive valuation and strong returns on capital provide a relative safe harbour. However, investors should remain vigilant to sector headwinds such as market volatility, interest rate fluctuations, and competitive pressures that could impact earnings momentum.

Investment Implications and Outlook

The recent upgrade in valuation attractiveness for Arihant Capital Markets Ltd suggests that the stock may be undervalued relative to its earnings power and sector peers. The P/E and EV multiples indicate a discount that could narrow if the company sustains its operational efficiency and capital returns.

Nonetheless, the stock’s recent price weakness and underperformance relative to the Sensex caution investors to consider timing and risk tolerance carefully. The modest dividend yield and solid ROCE provide some cushion, but the micro-cap nature and sector cyclicality warrant a balanced approach.

For investors seeking exposure to the capital markets sector with a focus on value and long-term growth, Arihant Capital’s improved valuation profile merits attention. However, monitoring sector developments and company-specific updates remains essential to navigate potential volatility.

Conclusion

Arihant Capital Markets Ltd’s shift from an attractive to a very attractive valuation rating marks a noteworthy development in its investment narrative. Supported by reasonable P/E and P/BV ratios, strong returns on capital, and a favourable position relative to peers, the stock presents a compelling case for value-oriented investors. While short-term price pressures persist, the company’s long-term track record and improved valuation metrics suggest potential for price appreciation if fundamentals hold steady.

Investors should weigh the company’s current Sell rating from MarketsMOJO alongside these valuation improvements and sector dynamics to make informed decisions aligned with their portfolio objectives.

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