Huhtamaki India Ltd Valuation Shifts to Very Attractive Amid Market Challenges

Valuation Metrics Signal Improved Price Attractiveness

Huhtamaki India’s P/E ratio currently stands at 11.72, a significant improvement from previous levels and well below many of its packaging peers. This figure contrasts sharply with Garware Hi Tech’s P/E of 31.77, which is considered very expensive, and is also lower than Uflex’s 14.11 and TCPL Packaging’s 21.08. The company’s price-to-book value of 1.12 further underscores its attractive valuation, suggesting the stock is trading close to its net asset value, a rarity in the packaging sector where premium valuations are common.

Other valuation multiples reinforce this positive shift. The enterprise value to EBITDA (EV/EBITDA) ratio is 6.53, indicating a relatively inexpensive operational cash flow valuation compared to peers such as Garware Hi Tech at 22.55 and TCPL Packaging at 11.03. The EV to EBIT ratio of 8.98 and EV to capital employed of 1.13 also support the narrative of undervaluation. The PEG ratio, a measure of valuation relative to earnings growth, is exceptionally low at 0.14, signalling that the stock is undervalued relative to its growth prospects.

Financial Performance and Returns Contextualise Valuation

Despite the attractive valuation, Huhtamaki India’s recent financial performance has been mixed. The company’s return on capital employed (ROCE) is 6.73%, and return on equity (ROE) is 9.55%, both modest figures that reflect moderate profitability and capital efficiency. These returns are below what might be expected from a high-growth packaging firm, which partly explains the cautious market sentiment and the downgrade in its Mojo Grade from Hold to Sell on 14 Jan 2026.

Market performance data further contextualises the valuation. Over the past year, Huhtamaki India’s stock has declined by 9.39%, underperforming the Sensex, which gained 9.35% over the same period. The five-year return is particularly stark, with the stock down 45.82% compared to the Sensex’s robust 62.73% gain. This underperformance has likely contributed to the stock’s current valuation discount, as investors remain wary of the company’s growth trajectory and competitive positioning.

Price Movement and Market Capitalisation

The stock closed at ₹182.30 on 23 Feb 2026, down 0.46% from the previous close of ₹183.15. It traded within a range of ₹181.40 to ₹183.90 during the day, well below its 52-week high of ₹272.45 but above the 52-week low of ₹170.40. The market cap grade of 3 indicates a mid-sized market capitalisation, which may limit liquidity and institutional interest compared to larger packaging firms.

Peer Comparison Highlights Valuation Edge

When compared with its packaging industry peers, Huhtamaki India’s valuation stands out as very attractive. Garware Hi Tech, for instance, is trading at a P/E ratio nearly three times higher, reflecting a premium valuation that may be justified by stronger growth or profitability metrics but also indicating potential overvaluation risks. AGI Greenpac and Uflex, both rated as attractive, have P/E ratios of 11.14 and 14.11 respectively, close to Huhtamaki’s but with higher PEG ratios, suggesting less favourable growth-adjusted valuations.

Huhtamaki’s EV/EBITDA multiple of 6.53 is also among the lowest in the peer group, indicating that the market is pricing in lower operational earnings relative to enterprise value. This could be a reflection of investor concerns about the company’s growth prospects or competitive pressures within the packaging sector. However, for value-oriented investors, these multiples suggest a potential entry point at a discount to intrinsic worth.

Mojo Score and Grade Reflect Caution

The company’s Mojo Score of 46.0 and a downgrade to a Sell grade on 14 Jan 2026 signal a cautious stance from MarketsMOJO’s analytical framework. This downgrade from Hold reflects concerns over the company’s earnings momentum, return ratios, and relative market performance. The score and grade serve as a reminder that while valuation is attractive, underlying business fundamentals and sector dynamics warrant careful scrutiny.

Investment Implications and Outlook

Huhtamaki India’s current valuation metrics suggest that the stock is trading at a discount relative to its historical averages and peer group, presenting a potentially attractive opportunity for value investors. However, the company’s modest profitability ratios and recent underperformance relative to the broader market temper enthusiasm. Investors should weigh the benefits of a low P/E and P/BV against the risks posed by subdued returns and sector competition.

Given the packaging sector’s evolving dynamics, including rising raw material costs and increasing demand for sustainable packaging solutions, Huhtamaki India’s ability to improve operational efficiency and capitalise on growth opportunities will be critical. The company’s dividend yield of 1.10% adds a modest income component but is unlikely to be a primary driver of investor interest.

Conclusion: Valuation Opportunity Amid Mixed Fundamentals

In summary, Huhtamaki India Ltd’s valuation parameters have improved markedly, with P/E and P/BV ratios now categorised as very attractive relative to peers and historical levels. This shift offers a potential entry point for investors focused on value within the packaging sector. However, the company’s modest returns on capital and equity, combined with recent stock underperformance and a Sell Mojo Grade, suggest that caution is warranted.

Investors should monitor Huhtamaki India’s operational performance and sector developments closely to assess whether the valuation discount can be converted into sustainable shareholder returns. For those willing to accept the risks, the current price levels may represent a favourable risk-reward proposition in a sector where many peers trade at stretched valuations.

Limited Period Only. Start at Rs. 9,999 - Get MojoOne for 1 Year + 3 Months FREE (60% Off) Get 71% Off →