Chambal Fertilisers & Chemicals Ltd: Valuation Shifts Signal Changing Market Sentiment

Valuation Metrics: A Closer Look

As of 30 January 2026, Chambal Fertilisers & Chemicals Ltd trades at a P/E ratio of 9.36, a figure that positions it below many of its industry peers but marks a shift from its previously more attractive valuation status. The company’s price-to-book value stands at 1.77, indicating a moderate premium over its net asset value. These metrics have contributed to the downgrade of its valuation grade from attractive to fair, signalling a less compelling entry point for investors seeking undervalued opportunities.

Other valuation multiples further contextualise this shift. The enterprise value to EBITDA (EV/EBITDA) ratio is 6.53, which remains relatively low compared to peers such as Deepak Fertilisers (9.05) and Paradeep Phosphates (9.42), suggesting that Chambal still trades at a discount on an operational earnings basis. The PEG ratio, a measure of valuation relative to earnings growth, is 0.45, indicating that the stock is still reasonably priced when factoring in growth prospects.

Comparative Peer Analysis

When compared with its peer group, Chambal Fertilisers’ valuation appears fair but less attractive than several competitors. For instance, Deepak Fertilisers and Paradeep Phosphates maintain attractive valuations with P/E ratios above 14 and EV/EBITDA multiples near 9. Meanwhile, companies like GSFC and National Fertilizers are rated fair or higher but trade at significantly higher P/E ratios of 10.71 and 38.24 respectively, reflecting differing growth expectations and risk profiles.

Notably, some peers such as SPIC and Madras Fertilisers are classified as very attractive, with P/E ratios of 7.92 and 15.44 and EV/EBITDA multiples of 5.41 and 9.61 respectively. This peer comparison highlights that while Chambal’s valuation has softened, it remains competitive within the sector, especially given its robust return metrics.

Financial Performance and Returns

Chambal Fertilisers & Chemicals Ltd demonstrates strong operational efficiency, with a return on capital employed (ROCE) of 24.47% and return on equity (ROE) of 18.93%. These figures underscore the company’s ability to generate healthy returns on invested capital, which partially offsets concerns arising from the valuation shift.

Dividend yield at 2.30% offers a modest income stream, appealing to income-focused investors. However, the stock’s recent price performance has been mixed. Over the past week, Chambal’s share price rose by 1.89%, outperforming the Sensex’s 0.31% gain. Yet, over the one-month and year-to-date periods, the stock declined by 8.44% and 9.74% respectively, underperforming the broader market indices.

Longer-term returns remain impressive, with a three-year gain of 49.49% and a five-year return of 83.12%, both surpassing the Sensex’s respective 39.16% and 78.38% returns. Over a decade, Chambal’s stock has delivered a remarkable 654.73% appreciation, significantly outpacing the Sensex’s 231.98% growth, reflecting the company’s sustained value creation over time.

Price Movement and Market Capitalisation

Currently priced at ₹435.10, the stock is trading near its 52-week low of ₹410.15 but well below its 52-week high of ₹742.45. The recent day’s trading saw a decline of 1.56%, with intraday prices fluctuating between ₹427.00 and ₹443.25. The market cap grade remains modest at 3, reflecting its small-cap status within the fertilizer sector.

This price behaviour suggests a cautious market stance, likely influenced by the valuation grade downgrade and broader sectoral headwinds. Investors may be weighing the company’s solid fundamentals against the less compelling valuation multiples and recent price volatility.

Mojo Score and Rating Update

MarketsMOJO’s latest assessment assigns Chambal Fertilisers a Mojo Score of 47.0, reflecting a cautious outlook. The Mojo Grade has been downgraded from Hold to Sell as of 29 January 2026, signalling a more conservative stance on the stock’s near-term prospects. This downgrade is primarily driven by the shift in valuation grade from attractive to fair, coupled with recent price underperformance and sector challenges.

The downgrade suggests that while the company maintains solid operational metrics and a strong historical track record, the current price does not offer the same margin of safety or upside potential as before. Investors are advised to consider this rating in the context of their portfolio risk tolerance and investment horizon.

Sector Outlook and Broader Market Context

The fertilizer sector continues to face a complex environment marked by fluctuating input costs, regulatory changes, and variable demand patterns. Within this context, valuation multiples across the sector have generally expanded, reflecting investor optimism about growth prospects and government support. Chambal Fertilisers’ relative valuation contraction may indicate market concerns about its ability to sustain growth or competitive positioning.

Nevertheless, the company’s robust returns on capital and consistent dividend yield provide a degree of defensive quality. Investors seeking exposure to the fertilizer sector should weigh Chambal’s fair valuation against peers offering more attractive multiples or stronger growth narratives.

Investment Implications

For investors, the shift in Chambal Fertilisers’ valuation parameters warrants a reassessment of the stock’s attractiveness. The move from attractive to fair valuation suggests that the stock is no longer a clear undervalued opportunity, though it remains reasonably priced relative to some peers. The downgrade to a Sell rating by MarketsMOJO further emphasises caution.

Long-term investors may find value in the company’s strong fundamentals and historical performance, but near-term price appreciation could be limited unless valuation multiples expand or operational performance improves. Those with a lower risk appetite might consider reallocating capital to peers with more compelling valuations or growth prospects.

Conclusion

Chambal Fertilisers & Chemicals Ltd’s recent valuation shift from attractive to fair reflects a changing market perception of its price attractiveness. While the company continues to demonstrate strong returns and operational efficiency, its relative valuation has softened amid sectoral and market dynamics. The downgrade in Mojo Grade to Sell underscores the need for investors to carefully evaluate the stock’s risk-reward profile in the current environment.

Comparative analysis with peers reveals that while Chambal remains competitively priced, alternatives with more attractive valuations and growth potential exist within the fertilizer sector. Investors should balance the company’s solid fundamentals against the tempered valuation outlook when making portfolio decisions.

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