Arrow Greentech Ltd Valuation Shifts to Fair Amid Market Pressure

Valuation Metrics Reflecting Improved Price Appeal

As of 23 Feb 2026, Arrow Greentech’s price-to-earnings (P/E) ratio stands at 12.21, a significant moderation from historically elevated levels that previously contributed to its expensive valuation status. This P/E multiple is now comfortably below many of its packaging sector peers, such as Apollo Pipes, which trades at a steep 43.9 P/E, and Rajoo Engineers at 18.35. The company’s price-to-book value (P/BV) ratio of 2.96 further supports this fair valuation stance, indicating that the stock is trading at just under three times its book value, a reasonable level given its sector and growth prospects.

Enterprise value multiples also paint a picture of relative affordability. Arrow Greentech’s EV to EBITDA ratio is 7.03, considerably lower than Shish Industries’ very expensive 46.33 and Rajoo Engineers’ 12.86. This suggests that the market is pricing Arrow Greentech’s earnings before interest, taxes, depreciation and amortisation at a more conservative level, potentially reflecting a more balanced risk-reward profile.

Strong Operational Returns Bolster Valuation Case

Beyond valuation multiples, Arrow Greentech’s operational efficiency remains impressive. The company’s return on capital employed (ROCE) is a robust 78.56%, signalling highly effective utilisation of capital to generate earnings. Similarly, the return on equity (ROE) at 24.06% underscores solid profitability for shareholders. These metrics provide a fundamental underpinning for the stock’s fair valuation, suggesting that the company’s earnings quality and capital management justify investor interest at current price levels.

Dividend yield, while modest at 0.96%, adds a small income component to the investment case, complementing the growth and valuation narrative.

Price Performance and Market Context

Despite the improved valuation, Arrow Greentech’s share price has experienced downward pressure recently. The stock closed at ₹415.80 on 23 Feb 2026, down 3.89% from the previous close of ₹432.65. The 52-week high of ₹816.15 contrasts sharply with the current price, indicating a significant correction over the past year. This is reflected in the stock’s year-to-date return of -18.11% and a one-year decline of -28.31%, both underperforming the Sensex, which has gained 9.35% over the same one-year period.

However, the longer-term performance tells a different story. Over five years, Arrow Greentech has delivered a remarkable 416.20% return, vastly outperforming the Sensex’s 62.73% gain. Even over three years, the stock’s 108.63% return more than triples the benchmark’s 36.45%. This disparity highlights the stock’s cyclical nature and the potential for recovery if valuation and operational momentum align.

Comparative Valuation: Peer Analysis Highlights Relative Value

When benchmarked against its packaging industry peers, Arrow Greentech’s valuation appears more attractive. Apollo Pipes and Rajoo Engineers, both rated as expensive, trade at P/E multiples of 43.9 and 18.35 respectively, while Tarsons Products, despite a fair valuation, commands a P/E near 49. Arrow Greentech’s P/E of 12.21 is markedly lower, suggesting the market currently prices in less growth or higher risk, which may present an opportunity for value-oriented investors.

Enterprise value to EBIT and EBITDA multiples further reinforce this perspective. Arrow Greentech’s EV to EBIT ratio of 7.90 and EV to EBITDA of 7.03 are well below the sector’s more stretched valuations, indicating a more conservative market assessment of its earnings power. This is particularly notable given the company’s strong ROCE and ROE metrics, which imply efficient capital deployment and profitability.

Mojo Score and Market Sentiment

Arrow Greentech currently holds a Mojo Score of 34.0 with a Mojo Grade of Sell, upgraded from a previous Strong Sell on 13 Aug 2025. This upgrade reflects the improved valuation parameters and operational metrics, although the score remains low, signalling caution. The Market Cap Grade of 4 indicates a smaller market capitalisation relative to larger peers, which may contribute to higher volatility and liquidity considerations for investors.

The stock’s recent price decline of nearly 4% on the day of analysis underscores ongoing market scepticism, possibly driven by broader sector headwinds or macroeconomic uncertainties. Nonetheless, the shift from expensive to fair valuation grades suggests that the market is beginning to recognise the company’s underlying value proposition.

Investment Implications and Outlook

For investors evaluating Arrow Greentech, the recent valuation recalibration offers a more compelling entry point compared to the stock’s previous expensive status. The fair P/E and P/BV ratios, combined with strong returns on capital and equity, suggest that the company’s fundamentals justify a premium over book value but no longer command an excessive market premium.

However, the stock’s underperformance relative to the Sensex over the past year and year-to-date period signals caution. Investors should weigh the potential for a rebound against sector-specific risks and broader market volatility. The packaging industry’s cyclical nature and competitive pressures may continue to influence near-term price movements.

Long-term investors may find value in Arrow Greentech’s demonstrated ability to generate substantial returns over five and three-year horizons, which have significantly outpaced the benchmark. This track record, coupled with the recent upgrade in valuation grade and Mojo rating, could indicate a turning point for the stock’s price trajectory.

Conclusion

Arrow Greentech Ltd’s shift from an expensive to a fair valuation grade marks a meaningful change in its price attractiveness profile. Supported by solid operational metrics and a more reasonable valuation relative to peers, the stock presents a nuanced opportunity for investors seeking exposure to the packaging sector. While near-term headwinds and market sentiment remain challenges, the company’s fundamentals and longer-term performance history provide a foundation for potential recovery and value realisation.

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