Chambal Fertilisers & Chemicals Ltd Valuation Shifts Signal Renewed Price Attractiveness

Valuation Metrics Signal Enhanced Attractiveness

Recent data reveals Chambal Fertilisers trading at a price-to-earnings (P/E) ratio of 9.20, significantly below the sector’s average and many of its peers. This P/E multiple is a key driver behind the company’s upgraded valuation grade from fair to attractive as of 3 February 2026. The price-to-book value (P/BV) stands at 1.74, indicating a reasonable premium over book value, yet still within an attractive range for the fertilisers industry.

Further supporting this valuation shift are the enterprise value to EBITDA (EV/EBITDA) and enterprise value to EBIT (EV/EBIT) ratios, which are 6.42 and 7.39 respectively. These multiples are lower than several competitors, suggesting Chambal Fertilisers is trading at a discount relative to its earnings before interest, taxes, depreciation, and amortisation. The PEG ratio of 0.44 also points to undervaluation when factoring in earnings growth, reinforcing the stock’s appeal.

Comparative Analysis with Industry Peers

When benchmarked against key fertiliser companies, Chambal Fertilisers’ valuation stands out favourably. For instance, Paradeep Phosphates trades at a P/E of 12.59 and EV/EBITDA of 8.42, while Deepak Fertilisers commands a P/E of 14.71 and EV/EBITDA of 9.10. Even RCF, a larger player, has a P/E of 24 and EV/EBITDA of 12.41, substantially higher than Chambal’s multiples.

Other peers such as GSFC and GNFC have P/E ratios of 10.62 and 10.73 respectively, with GNFC rated as very attractive but still trading at higher multiples. This comparative valuation landscape underscores Chambal Fertilisers’ relative undervaluation, which has been recognised in the recent upgrade of its Mojo Grade from Sell to Hold, with a Mojo Score of 52.0.

Financial Strength and Profitability Metrics

Chambal Fertilisers’ return on capital employed (ROCE) is a robust 24.47%, while return on equity (ROE) stands at 18.93%. These figures highlight efficient capital utilisation and strong profitability, which are critical for sustaining growth in the capital-intensive fertilisers sector. The dividend yield of 2.34% adds an income component for investors, complementing the valuation appeal.

These financial metrics, combined with the attractive valuation, suggest that the company is well-positioned to deliver shareholder value over the medium term. The enterprise value to capital employed ratio of 1.81 and EV to sales of 0.84 further indicate operational efficiency and a reasonable market valuation relative to sales.

Stock Price Performance and Market Context

Despite the positive valuation shift, Chambal Fertilisers’ stock price has experienced some pressure recently. The share closed at ₹427.70 on 6 February 2026, down 2.36% from the previous close of ₹438.05. The 52-week high remains at ₹742.45, while the 52-week low is ₹410.15, indicating a wide trading range over the past year.

Performance comparisons with the Sensex reveal mixed trends. Over the past week, Chambal Fertilisers declined by 1.70%, whereas the Sensex gained 0.91%. Over one month and year-to-date periods, the stock has underperformed the benchmark, falling 11.47% and 11.27% respectively, compared to Sensex gains of 2.49% and 2.24%. However, longer-term returns are impressive, with a 3-year return of 45.62% versus 36.94% for the Sensex, and a 10-year return of 649.04% compared to 238.44% for the benchmark.

Valuation Grade Upgrade Reflects Market Reassessment

The upgrade in Chambal Fertilisers’ valuation grade from fair to attractive, accompanied by the Mojo Grade improvement from Sell to Hold, signals a market reassessment of the stock’s prospects. This change was effected on 3 February 2026, reflecting recent financial disclosures and market conditions. The company’s market capitalisation grade remains modest at 3, consistent with its mid-cap status within the fertilisers sector.

Investors should note that while valuation multiples have become more compelling, the stock’s recent price volatility and sector-specific risks, including commodity price fluctuations and regulatory changes, warrant cautious optimism.

Investment Implications and Outlook

Chambal Fertilisers & Chemicals Ltd’s improved valuation metrics present a more attractive entry point for investors seeking exposure to the fertilisers sector. The company’s strong profitability ratios and reasonable dividend yield enhance its investment case. However, the stock’s recent underperformance relative to the Sensex and sector peers suggests that investors should weigh valuation benefits against near-term market risks.

Given the company’s historical outperformance over longer horizons, with a 5-year return of 73.30% versus 64.22% for the Sensex, and a remarkable 10-year return exceeding 600%, Chambal Fertilisers remains a noteworthy contender for portfolios focused on quality mid-cap stocks in the fertilisers space.

Investors are advised to monitor sector developments, commodity price trends, and regulatory updates closely, as these factors will continue to influence the stock’s trajectory. The current valuation upgrade provides a foundation for potential upside, but prudent risk management remains essential.

Summary

In summary, Chambal Fertilisers & Chemicals Ltd’s shift to an attractive valuation grade, supported by a P/E of 9.20, EV/EBITDA of 6.42, and a PEG ratio of 0.44, marks a significant improvement in its price attractiveness. When compared with peers, the company offers compelling value, bolstered by strong ROCE and ROE metrics. While recent price declines and sector volatility temper enthusiasm, the stock’s long-term performance and upgraded ratings suggest it merits consideration for investors seeking balanced exposure to the fertilisers industry.

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