Haryana Leather Chemicals Ltd Valuation Shifts to Fair Amid Mixed Market Returns

Valuation Metrics Reflect Improved Price Attractiveness

As of the latest assessment, Haryana Leather Chemicals Ltd trades at a P/E ratio of 15.14, a significant moderation compared to its prior valuation extremes. This figure positions the company comfortably within a fair valuation band, especially when contrasted with peers such as Stallion India and Sanstar Chemicals, which command P/E ratios of 62.26 and 81.81 respectively, categorised as very expensive and expensive. The company’s price-to-book value stands at 0.71, indicating the stock is trading below its book value, a factor that often appeals to value-oriented investors seeking undervalued opportunities.

Enterprise value multiples further corroborate this valuation shift. Haryana Leather’s EV to EBITDA ratio is 6.98, markedly lower than the sector heavyweights like Sanstar Chemicals at 81.39 and Platinum Industries at 22.34. Such metrics suggest that the company’s earnings before interest, taxes, depreciation and amortisation are being valued more conservatively, enhancing the stock’s relative appeal.

Financial Performance and Returns Contextualise Valuation

Despite the improved valuation, Haryana Leather’s return metrics present a mixed picture. The company’s return on capital employed (ROCE) is 6.36%, and return on equity (ROE) is 4.66%, both modest figures that reflect moderate operational efficiency and profitability. Dividend yield at 1.58% adds a modest income component for investors but does not significantly enhance the stock’s attractiveness on its own.

Examining stock returns relative to the benchmark Sensex reveals a nuanced performance. Over the past week and month, Haryana Leather outperformed the Sensex with returns of 1.36% and 5.42% respectively, compared to the Sensex’s 0.43% and -0.24%. Year-to-date, the stock has gained 2.33% while the Sensex declined by 1.81%. However, over the one-year horizon, the stock underperformed with a negative return of -12.15% against the Sensex’s robust 9.85% gain. Longer-term returns over five and ten years show strong absolute gains of 124.69% and 121.93%, though these lag behind the Sensex’s 62.34% and 264.02% respectively, indicating the stock’s growth has been less consistent than the broader market.

Mojo Score and Grade Reflect Caution Despite Valuation Improvement

MarketsMOJO’s proprietary scoring system assigns Haryana Leather Chemicals Ltd a Mojo Score of 20.0, with a Mojo Grade of Strong Sell as of 21 Nov 2025, an upgrade from the previous Sell rating. This indicates that while valuation metrics have improved, other fundamental and market factors continue to weigh on the stock’s overall attractiveness. The market capitalisation grade is rated 4, reflecting a micro-cap status that often entails higher volatility and risk compared to larger peers.

The upgrade in grade suggests some positive momentum or reduced downside risk, but the strong sell rating underscores persistent concerns, possibly linked to operational performance, sector headwinds, or competitive pressures within the commodity chemicals industry.

Comparative Valuation Landscape in Commodity Chemicals Sector

Within the commodity chemicals sector, Haryana Leather’s valuation stands out as relatively moderate. Several peers remain expensive or very expensive, with P/E ratios well above 25 and EV/EBITDA multiples exceeding 10. For instance, Platinum Industries trades at a P/E of 29.75 and EV/EBITDA of 22.34, while Jyoti Resins is valued at a P/E of 16.27 and EV/EBITDA of 11.42. Conversely, some companies such as TGV Sraac and Gulshan Polyols are rated very attractive with P/E ratios of 7.61 and 23.72 respectively, and EV/EBITDA multiples below 11.

This comparative framework highlights Haryana Leather’s repositioning from a previously very expensive valuation to a fair value zone, potentially making it a more compelling option for investors seeking exposure to the commodity chemicals space without paying a premium.

Price Movement and Trading Range Insights

Haryana Leather Chemicals Ltd’s current share price stands at ₹63.25, up 1.62% on the day, with a trading range between ₹63.25 and ₹63.50. The stock’s 52-week high is ₹88.80, while the low is ₹52.00, indicating a significant price recovery potential from recent lows. The current price is approximately 29% below the 52-week high, suggesting room for upside if market sentiment improves or operational results strengthen.

Such price dynamics, combined with the fair valuation status, may attract investors looking for value plays in the commodity chemicals sector, especially given the stock’s outperformance relative to the Sensex over shorter time frames.

Outlook and Investor Considerations

While Haryana Leather Chemicals Ltd’s valuation metrics have improved markedly, investors should weigh this against the company’s modest profitability ratios and mixed return performance relative to the broader market. The strong sell Mojo Grade signals caution, suggesting that valuation alone may not justify a bullish stance without accompanying operational improvements or sector tailwinds.

Investors with a value-oriented approach may find the stock’s current P/E and P/BV ratios attractive, especially given the discount to book value and reasonable enterprise multiples. However, the company’s relatively low ROCE and ROE indicate that capital efficiency and shareholder returns remain areas for improvement.

Comparisons with peers reveal that while Haryana Leather is no longer among the most expensive stocks in its sector, there remain companies with stronger growth prospects or more attractive valuations. This underscores the importance of a comprehensive evaluation incorporating financial health, market positioning, and sector dynamics.

In summary, Haryana Leather Chemicals Ltd’s shift to a fair valuation band represents a positive development for price-sensitive investors, but the overall investment thesis remains tempered by fundamental challenges and a cautious market outlook.

Summary of Key Financial Metrics

Price-to-Earnings Ratio: 15.14 (Fair valuation)
Price-to-Book Value: 0.71 (Below book value)
EV to EBITDA: 6.98 (Moderate valuation)
ROCE: 6.36% (Modest capital efficiency)
ROE: 4.66% (Low shareholder returns)
Dividend Yield: 1.58% (Modest income)
Mojo Score: 20.0 (Strong Sell)
Market Cap Grade: 4 (Micro-cap)

Investment professionals and market participants should continue to monitor Haryana Leather Chemicals Ltd’s operational performance and sector developments closely to reassess valuation attractiveness and risk-reward balance.

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