Valuation Metrics Signal Enhanced Price Attractiveness
Federal-Mogul Goetze currently trades at a P/E ratio of 14.21, a significant discount compared to many of its peers in the auto components and equipment industry. This ratio is well below the likes of Endurance Technologies, which trades at a P/E of 40.93, and Motherson Wiring, which is priced at 52.95. The company’s price-to-book value stands at 1.89, indicating a reasonable premium over book value but still within a range that investors find appealing given the company’s return on equity (ROE) of 13.29% and return on capital employed (ROCE) of 30.65%.
These valuation improvements have prompted a downgrade in the company’s Mojo Grade from Buy to Hold as of 20 Nov 2025, reflecting a more cautious stance despite the very attractive valuation. The Mojo Score currently stands at 67.0, signalling moderate confidence in the stock’s near-term prospects.
Comparative Analysis with Industry Peers
When compared with its peer group, Federal-Mogul Goetze’s valuation stands out for its relative affordability. For instance, ZF Commercial and Gabriel India trade at P/E ratios of 57.67 and 58.48 respectively, with EV/EBITDA multiples exceeding 35. In contrast, Federal-Mogul Goetze’s EV/EBITDA ratio is a modest 6.29, underscoring its undervaluation relative to earnings before interest, tax, depreciation and amortisation.
Moreover, the company’s PEG ratio of 0.47 is substantially lower than peers such as Endurance Technologies (3.02) and ZF Commercial (3.22), suggesting that Federal-Mogul Goetze offers earnings growth potential at a much more reasonable price. This low PEG ratio is a key factor in the shift to a very attractive valuation grade, signalling that the stock is undervalued relative to its expected earnings growth.
Stock Price and Market Capitalisation Context
The stock closed at ₹461.85 on 2 Jan 2026, down 0.94% from the previous close of ₹466.25. The 52-week trading range spans from ₹308.10 to ₹622.00, indicating significant volatility but also room for upside from current levels. The market capitalisation grade remains modest at 3, reflecting the company’s mid-cap status within the auto components sector.
Despite the recent price dip, Federal-Mogul Goetze has outperformed the Sensex over the medium term. The stock delivered a 20.27% return over the past year compared to the Sensex’s 8.51%, and a 46.11% gain over three years versus the Sensex’s 40.02%. However, over a five-year horizon, the Sensex’s 77.96% return outpaced the company’s 48.27%, highlighting some relative underperformance in the longer term.
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Operational Efficiency and Profitability Metrics
Federal-Mogul Goetze’s robust ROCE of 30.65% is a testament to its efficient capital utilisation, which is well above industry averages. This strong capital efficiency supports the company’s ability to generate sustainable profits and justifies its valuation premium relative to book value. The ROE of 13.29% further confirms the company’s capacity to deliver shareholder returns, albeit at a level that suggests room for improvement compared to some high-growth peers.
While dividend yield data is not available, the company’s valuation and profitability metrics suggest that earnings retention and reinvestment are likely priorities, positioning it well for future growth in the auto components sector.
Valuation Grade Evolution and Market Sentiment
The recent upgrade in Federal-Mogul Goetze’s valuation grade from attractive to very attractive reflects a market reassessment of its price relative to earnings and growth prospects. This shift is particularly notable given the broader auto components sector’s mixed valuation landscape, where several peers trade at expensive multiples despite slower growth trajectories.
Investors appear to be rewarding Federal-Mogul Goetze’s consistent operational performance and reasonable valuation, even as the stock’s Mojo Grade was downgraded to Hold. This suggests a nuanced market view that values the company’s fundamentals but remains cautious about near-term catalysts or sector headwinds.
Peer Valuation Spectrum Highlights Investment Opportunities
Within the peer group, Federal-Mogul Goetze’s valuation metrics stand out as a relative bargain. TVS Holdings, another very attractive stock, trades at a higher P/E of 19.55 and EV/EBITDA of 7.15, while companies like JBM Auto and Minda Corp are classified as expensive with P/E ratios above 50 and EV/EBITDA multiples exceeding 24.
This valuation disparity underscores the potential for Federal-Mogul Goetze to attract value-oriented investors seeking exposure to the auto components sector without the premium pricing of some competitors.
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Outlook and Investor Considerations
Federal-Mogul Goetze’s valuation repositioning to very attractive, combined with its strong operational metrics, makes it a noteworthy candidate for investors seeking value in the auto components sector. However, the downgrade in Mojo Grade to Hold signals that investors should weigh potential risks, including sector cyclicality and competitive pressures.
Given the company’s current P/E of 14.21 and PEG ratio of 0.47, the stock offers a compelling entry point relative to growth expectations. The EV/EBITDA multiple of 6.29 further supports the view that the stock is undervalued on an enterprise basis, especially when contrasted with more expensive peers.
Investors should also consider the stock’s recent price volatility and its performance relative to the Sensex, which has outpaced Federal-Mogul Goetze over the past decade. This suggests that while the company has delivered solid returns in the medium term, longer-term growth may be more modest compared to broader market benchmarks.
Conclusion
Federal-Mogul Goetze (India) Ltd’s shift to a very attractive valuation grade reflects a significant improvement in price attractiveness, driven by favourable P/E, P/BV, and EV/EBITDA ratios relative to peers and historical levels. The company’s strong ROCE and ROE underpin its operational strength, while its valuation metrics suggest it remains undervalued in a sector where many competitors trade at stretched multiples.
While the Mojo Grade downgrade to Hold advises caution, the stock’s relative affordability and solid fundamentals make it a viable option for value-focused investors. Monitoring sector dynamics and company-specific developments will be crucial to assessing the stock’s trajectory in the coming months.
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