Garg Furnace Ltd Valuation Shifts to Fair Amidst Strong Price Gains

Valuation Metrics and Recent Changes

As of 12 Feb 2026, Garg Furnace Ltd trades at ₹159.40, up 11.00% from the previous close of ₹143.60. The stock’s 52-week range spans ₹120.10 to ₹265.80, indicating significant volatility over the past year. The company’s price-to-earnings (P/E) ratio currently stands at 11.64, while the price-to-book value (P/BV) is 1.17. These figures mark a shift from previously more attractive valuation levels to a fair valuation grade, signalling a moderation in price attractiveness.

Enterprise value to EBITDA (EV/EBITDA) is at 11.39, and EV to EBIT is 13.93, both reflecting moderate valuation multiples relative to earnings. The EV to capital employed ratio is 1.18, and EV to sales is 0.41, underscoring the company’s capital efficiency and sales valuation in line with sector norms. Notably, the PEG ratio remains at 0.00, indicating either a lack of meaningful earnings growth projections or data unavailability.

Comparative Peer Analysis

When compared with peers in the Iron & Steel Products industry, Garg Furnace’s valuation appears more reasonable but less compelling. For instance, Rama Steel Tubes is classified as expensive with a P/E of 67.67 and EV/EBITDA of 56.31, while Hariom Pipe is deemed very attractive with a P/E of 18.67 and EV/EBITDA of 8.16. Other peers such as Ratnaveer Precis and Steel Exchange also maintain attractive or very attractive valuations, with P/E ratios of 17.71 and 30.61 respectively, and EV/EBITDA multiples below Garg Furnace’s.

Conversely, Gandhi Spl. Tube is considered very expensive despite a lower P/E of 13.72, reflecting other valuation concerns. Some companies like Panchmahal Steel and India Homes are classified as risky due to loss-making status, highlighting Garg Furnace’s relative stability despite valuation moderation.

Financial Performance and Returns

Garg Furnace’s return on capital employed (ROCE) stands at 8.44%, while return on equity (ROE) is 10.07%. These profitability metrics suggest moderate efficiency in generating returns from capital and equity, though they lag behind some more efficient peers. Dividend yield data is not available, which may affect income-focused investors’ interest.

Examining stock returns relative to the Sensex reveals a mixed picture. Over the past week and month, Garg Furnace has outperformed significantly, delivering 16.10% and 19.71% returns respectively, compared to Sensex gains of 0.50% and 0.79%. Year-to-date, the stock has risen 20.30%, while the Sensex declined by 1.16%. However, over the one-year horizon, Garg Furnace has underperformed with a -36.87% return versus Sensex’s 10.41% gain.

Longer-term performance is impressive, with Garg Furnace delivering 124.98% over three years, 1453.61% over five years, and an extraordinary 1494.00% over ten years, vastly outpacing the Sensex’s respective returns of 38.81%, 63.46%, and 267.00%. This long-term outperformance underscores the company’s growth potential and resilience despite recent valuation adjustments.

Mojo Score and Rating Implications

Garg Furnace’s MarketsMOJO score currently stands at 31.0, with a Mojo Grade of Sell, upgraded from a previous Strong Sell rating on 4 Feb 2026. This upgrade reflects some improvement in the company’s outlook or valuation, but the overall sentiment remains cautious. The market capitalisation grade is 4, indicating a mid-cap status with moderate liquidity and investor interest.

The upgrade in Mojo Grade suggests that while the stock’s valuation has become less attractive, it is no longer considered a strong sell candidate. Investors should weigh this against the company’s moderate profitability and recent price momentum.

Sector and Market Context

The Iron & Steel Products sector continues to face cyclical pressures, including raw material cost fluctuations, demand variability, and global trade dynamics. Garg Furnace’s valuation shift from attractive to fair may partly reflect these sector headwinds, as well as investor caution amid broader market volatility.

Despite these challenges, Garg Furnace’s long-term returns and moderate valuation multiples position it as a potential recovery candidate if sector conditions improve. However, investors should remain vigilant about the company’s earnings growth prospects, which currently appear limited given the PEG ratio of zero.

Investment Considerations and Outlook

For investors considering Garg Furnace Ltd, the current fair valuation suggests a more balanced risk-reward profile compared to earlier periods of greater price attractiveness. The stock’s recent strong price gains and long-term outperformance versus the Sensex are positives, but the moderate profitability metrics and sector uncertainties temper enthusiasm.

Peer comparisons highlight that more attractive valuation opportunities exist within the sector, such as Hariom Pipe and Ratnaveer Precis, which offer lower EV/EBITDA multiples and higher growth potential. Conversely, some peers are significantly more expensive or risky, underscoring the importance of selective stock picking.

Conclusion

Garg Furnace Ltd’s transition from an attractive to a fair valuation grade reflects a recalibration of market expectations amid sector challenges and peer dynamics. While the stock’s recent price appreciation and long-term returns remain compelling, moderate profitability and limited growth visibility warrant caution. Investors should consider Garg Furnace within the broader context of sector valuations and peer comparisons, balancing potential upside against inherent risks.

Given the current Mojo Grade of Sell and a modest upgrade from Strong Sell, Garg Furnace may appeal to investors with a medium-term horizon who are comfortable with sector cyclicality and valuation moderation. However, those seeking higher growth or more compelling valuations might explore alternative opportunities within the Iron & Steel Products sector.

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