Hilton Metal Forging Ltd Valuation Shifts to Attractive Amidst Market Challenges

Current Valuation Metrics and Market Performance

As of 26 Feb 2026, Hilton Metal Forging Ltd trades at ₹18.10 per share, down 6.56% on the day from a previous close of ₹19.37. The stock has experienced a steep decline over the past year, with a 1-year return of -78.18%, starkly contrasting with the Sensex’s 10.29% gain over the same period. The 52-week high was ₹84.19, while the low stands at ₹17.50, indicating significant volatility and downward pressure on the stock price.

Despite this, the company’s valuation grade has improved from “very attractive” to “attractive,” signalling a relative enhancement in price appeal. The price-to-earnings (P/E) ratio currently stands at 11.88, which is considerably lower than many peers in the castings and forgings sector. For context, MM Forgings trades at a P/E of 25.84, Nelcast at 21.28, and Pradeep Metals at 21.01, while some companies like Synergy Green and Inv. & Prec. Castings are priced at much higher multiples of 91.9 and 53.96 respectively.

Price-to-Book Value and Enterprise Value Multiples

Hilton Metal Forging’s price-to-book value (P/BV) ratio is 0.79, indicating the stock is trading below its book value, a factor often interpreted as undervaluation. This contrasts with the sector average, where many peers trade above book value, reflecting either higher growth expectations or premium valuations. The company’s enterprise value to EBITDA (EV/EBITDA) ratio is 13.97, slightly higher than some peers like MM Forgings (11.84) and Nelcast (11.24), but lower than more expensive stocks such as Synergy Green (21.64) and Inv. & Prec. Castings (22.42).

Other valuation multiples include EV to EBIT at 17.49 and EV to Capital Employed at 0.86, both suggesting a moderate valuation stance relative to the company’s earnings and capital base. The EV to Sales ratio of 0.69 further supports the view that Hilton Metal Forging is priced attractively compared to its revenue generation capacity.

Profitability and Efficiency Metrics

While valuation metrics indicate potential value, profitability ratios reveal challenges. Hilton Metal Forging’s return on capital employed (ROCE) is 4.54%, and return on equity (ROE) stands at 6.67%, both modest figures that lag behind industry leaders. These returns suggest the company is generating limited profit relative to its capital and equity base, which may justify the subdued valuation multiples.

The price-to-earnings-to-growth (PEG) ratio is exceptionally low at 0.14, signalling that the stock’s price is low relative to its earnings growth potential. However, this metric should be interpreted cautiously given the company’s recent performance and sector dynamics.

Comparative Analysis with Peers

When benchmarked against its peer group within the castings and forgings sector, Hilton Metal Forging’s valuation appears more attractive on a relative basis. Several competitors trade at significantly higher P/E multiples, reflecting either stronger growth prospects or market favour. For instance, Amic Forging and Captain Techno trade at P/E ratios above 44, while Simplex Castings and Pradeep Metals maintain P/E ratios in the high teens to low twenties.

However, the company’s EV/EBITDA multiple of 13.97 is somewhat elevated compared to some peers, suggesting that while the earnings multiple is low, the enterprise valuation relative to operating cash flow is less compelling. This discrepancy may be due to differences in capital structure, debt levels, or operational efficiency.

Stock Price Performance and Market Sentiment

Hilton Metal Forging’s stock has underperformed the broader market significantly over multiple time horizons. The 1-week return of -23.73% and 1-month return of -36.31% starkly contrast with the Sensex’s modest gains of 1.74% and 0.91% respectively. Year-to-date, the stock has declined by 48.23%, while the Sensex has risen by 3.46%. Over the longer term, the 3-year and 5-year returns of -82.60% and +95.53% respectively highlight a volatile and challenging investment journey.

Such underperformance has likely contributed to the stock’s improved valuation attractiveness, as market participants price in risks and uncertainties. The downgrade in the company’s Mojo Grade from Strong Sell to Sell on 21 Jul 2025 reflects a cautious stance by analysts, acknowledging some improvement but maintaining a negative outlook overall.

Outlook and Investment Considerations

Investors considering Hilton Metal Forging should weigh the improved valuation metrics against the company’s operational challenges and market risks. The attractive P/E and P/BV ratios suggest potential value, but modest profitability and weak recent price performance temper enthusiasm. The company’s low ROCE and ROE indicate limited capital efficiency, which may constrain future growth and returns.

Moreover, the sector’s competitive landscape and the presence of more favourably rated peers with stronger financial metrics suggest that investors might find better opportunities elsewhere. The company’s PEG ratio, while low, must be analysed in the context of actual earnings growth and sustainability.

Conclusion

Hilton Metal Forging Ltd’s shift in valuation from very attractive to attractive reflects a nuanced market view amid significant share price declines and operational challenges. While the stock’s P/E and P/BV ratios suggest it is undervalued relative to peers, modest profitability and weak recent returns warrant caution. Investors should carefully consider the company’s fundamentals alongside broader sector dynamics before making investment decisions.

Given the current Mojo Grade of Sell and a Mojo Score of 34.0, the stock remains a cautious proposition. Market participants seeking exposure to the castings and forgings sector might explore alternative companies with stronger financial profiles and more favourable valuations.

Only Rs. 9,999 - Get MojoOne for 1 Year + 3 Months FREE (60% Off) Start Today