Garnet International Ltd Valuation Shifts Signal Renewed Price Attractiveness

Valuation Metrics Signal Improved Price Attractiveness

Garnet International’s current P/E ratio stands at 28.96, a figure that, while elevated compared to some peers, reflects a significant improvement from previous levels that were considered fair but less enticing. The price-to-book value ratio is 2.97, indicating that the stock is trading at just under three times its book value, a level that has shifted the company’s valuation grade to “attractive” from a prior neutral stance. This reclassification was officially recorded on 22 Dec 2025, coinciding with a downgrade in the company’s overall Mojo Grade from Strong Sell to Sell, reflecting a nuanced view of the stock’s prospects.

Other valuation multiples such as EV to EBIT and EV to EBITDA both stand at 36.24, which are on the higher side, signalling that the market is pricing in growth expectations despite the current earnings profile. The EV to Capital Employed ratio is a modest 2.93, suggesting efficient capital utilisation relative to enterprise value. Meanwhile, the PEG ratio of 2.15 indicates that the stock is trading at a premium relative to its earnings growth, a factor that investors should weigh carefully.

Comparative Analysis with Industry Peers

When benchmarked against its NBFC peers, Garnet International’s valuation appears more reasonable. For instance, Mufin Green and Ashika Credit are classified as “Very Expensive” with P/E ratios soaring above 100 and 170 respectively, while Satin Creditcare and SMC Global Securities share an “Attractive” valuation tag but with lower P/E ratios of 9.09 and 21.14. Garnet’s P/E of 28.96 places it in a middle ground, suggesting a balanced risk-reward profile.

It is notable that several peers such as Arman Financial and LKP Finance are loss-making, rendering their valuation metrics less meaningful. Garnet’s positive return on capital employed (ROCE) of 8.10% and return on equity (ROE) of 10.26% further underscore its relative operational stability within the sector.

Stock Price and Market Capitalisation Context

Garnet International’s current market price is ₹63.27, down from a previous close of ₹66.60, marking a 5.0% decline on the day of analysis (10 Feb 2026). The stock’s 52-week high was ₹142.95, while the 52-week low was ₹42.00, indicating significant volatility over the past year. The company holds a Market Cap Grade of 4, reflecting a mid-cap status that often entails higher volatility but also growth potential.

Performance Relative to Sensex and Historical Returns

Examining the stock’s returns relative to the benchmark Sensex reveals a mixed picture. Over the past week, Garnet International’s stock fell sharply by 16.86%, contrasting with a 2.94% gain in the Sensex. However, over the one-month horizon, the stock rebounded strongly with a 34.90% gain, outperforming the Sensex’s modest 0.59% rise. Year-to-date, the stock has delivered a 20.98% return, while the Sensex declined by 1.36%.

Longer-term returns are less encouraging. Over one year, Garnet’s stock has plummeted 56.06%, significantly underperforming the Sensex’s 7.97% gain. Over three years, the stock is down 3.11%, lagging the Sensex’s robust 38.25% advance. However, over five years, Garnet International has outpaced the Sensex with a 90.29% return versus 63.78%, though the ten-year return is flat at 0.06% compared to the Sensex’s 249.97% surge.

Mojo Score and Grade Implications

Garnet International’s current Mojo Score is 34.0, which corresponds to a Sell rating. This represents an upgrade from a previous Strong Sell grade, signalling a slight improvement in the company’s fundamental and market outlook. The downgrade in the severity of the rating suggests that while risks remain, the valuation shift to attractive levels has been recognised by analysts and rating models alike.

Dividend and Profitability Metrics

The company currently does not offer a dividend yield, which may deter income-focused investors. However, its profitability metrics, including a ROCE of 8.10% and ROE of 10.26%, indicate moderate efficiency in generating returns on capital and equity. These figures are respectable within the NBFC sector, where asset quality and capital management are critical.

Sector and Industry Outlook

The NBFC sector continues to face headwinds from regulatory changes and credit quality concerns, which have impacted investor sentiment broadly. Garnet International’s valuation improvement may reflect expectations of stabilisation or recovery in asset quality and earnings growth. However, the relatively high EV to EBITDA and EV to EBIT multiples suggest that the market is pricing in future growth that must be realised to justify current valuations.

Investment Considerations and Outlook

Investors considering Garnet International should weigh the improved valuation metrics against the company’s mixed recent performance and sector challenges. The attractive P/E and P/BV ratios relative to peers provide a valuation cushion, but the elevated EV multiples and PEG ratio suggest that growth expectations remain high. The stock’s volatile price history and underperformance over the medium term caution for a measured approach.

Given the current Sell rating and the recent downgrade from Strong Sell, the stock may appeal to investors with a higher risk tolerance who believe in a turnaround or sector recovery. Conversely, more conservative investors might prefer peers with stronger profitability or lower valuation multiples.

Summary

Garnet International Ltd’s shift to an attractive valuation grade marks a significant development in its investment profile. While the company’s P/E of 28.96 and P/BV of 2.97 now compare favourably within the NBFC sector, the broader market context and company fundamentals suggest a cautious stance. The downgrade in Mojo Grade to Sell reflects this balanced view, recognising both the valuation opportunity and the risks ahead.

Investors should monitor upcoming earnings releases and sector developments closely to assess whether Garnet International can convert its valuation appeal into sustainable performance gains.

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