International Combustion (India) Ltd: Valuation Shifts Signal Renewed Price Attractiveness Amid Market Challenges

Valuation Metrics Signal Improved Price Attractiveness

As of 23 Feb 2026, International Combustion (India) Ltd trades at a P/E ratio of 32.31, a figure that, while elevated compared to some peers, represents a marked improvement in valuation attractiveness relative to its historical range and sector averages. The company’s P/BV ratio stands at 0.82, indicating the stock is trading below its book value, a classic hallmark of undervaluation in industrial manufacturing stocks.

Further valuation multiples reinforce this narrative. The enterprise value to EBITDA (EV/EBITDA) ratio is 10.09, which is considerably lower than several industry peers such as A B Infrabuild (36.86) and CFF Fluid (27.21). This suggests that the market is pricing International Combustion’s earnings before interest, taxes, depreciation, and amortisation more favourably, potentially reflecting expectations of operational improvements or a re-rating of the stock.

Comparative Peer Analysis Highlights Relative Value

When benchmarked against a select peer group within the industrial manufacturing sector, International Combustion’s valuation stands out as attractive. For instance, Manaksia Coated, another peer with an ‘attractive’ valuation grade, trades at a similar P/E of 32.16 but commands a higher EV/EBITDA multiple of 16.87. Conversely, BMW Industries is rated ‘very attractive’ with a P/E of 12.36 and EV/EBITDA of 7.01, underscoring a spectrum of valuation opportunities within the sector.

On the other end of the spectrum, companies such as Permanent Magnet and A B Infrabuild are classified as ‘very expensive’ with P/E ratios exceeding 50 and EV/EBITDA multiples above 20, signalling that International Combustion’s current valuation offers a more reasonable risk-reward profile for value-oriented investors.

Financial Performance and Quality Metrics

Despite the valuation appeal, International Combustion’s fundamental performance presents a mixed picture. The company’s return on capital employed (ROCE) is 10.16%, which is modest but positive, indicating some efficiency in capital utilisation. However, the return on equity (ROE) is relatively low at 2.53%, suggesting limited profitability on shareholder funds.

Dividend yield remains subdued at 0.89%, reflecting either a conservative dividend policy or reinvestment of earnings into growth or debt reduction. The EV to capital employed ratio of 0.81 and EV to sales of 0.35 further indicate that the company is valued attractively relative to its asset base and revenue generation capacity.

Stock Price and Market Capitalisation Context

International Combustion’s current market price is ₹450.10, marginally down from the previous close of ₹450.65. The stock has experienced significant volatility over the past 52 weeks, with a high of ₹1,049.00 and a low of ₹435.00, reflecting broader sectoral and macroeconomic pressures. The market cap grade is rated 4, indicating a mid-tier market capitalisation within its peer group.

Daily trading ranges on 23 Feb 2026 saw the stock fluctuate between ₹435.00 and ₹456.00, underscoring ongoing investor caution amid a challenging industrial backdrop.

Returns Analysis: Underperformance Against Sensex Benchmarks

International Combustion’s recent returns have lagged the broader market significantly. Year-to-date (YTD), the stock has declined by 23.77%, compared to a Sensex gain of 2.82%. Over the past year, the underperformance is even starker, with the stock down 43.73% while the Sensex rose 9.35%. This divergence highlights sector-specific headwinds and company-specific challenges that have weighed on investor sentiment.

Longer-term returns tell a more nuanced story. Over five years, the stock has delivered a robust 140.70% return, outperforming the Sensex’s 62.73% gain, suggesting that despite recent setbacks, International Combustion has demonstrated resilience and growth potential over the medium term. The 10-year return of 97.59% trails the Sensex’s 249.29%, indicating that the stock has not fully captured the broader market’s rally over the last decade.

Mojo Score and Rating Update

MarketsMOJO’s proprietary scoring system currently assigns International Combustion a Mojo Score of 28.0, reflecting a cautious stance on the stock’s near-term prospects. The Mojo Grade has been downgraded from ‘Sell’ to ‘Strong Sell’ as of 04 Nov 2025, signalling increased concerns over valuation sustainability and operational risks. This downgrade contrasts with the improved valuation grade from ‘fair’ to ‘attractive’, highlighting a disconnect between price appeal and underlying quality or momentum factors.

The market cap grade of 4 further suggests that while the company is not among the largest industrial manufacturing firms, it holds a meaningful position within its sector, warranting attention from mid-cap focused investors.

Sector and Market Context

The industrial manufacturing sector has faced headwinds due to fluctuating commodity prices, supply chain disruptions, and subdued capital expenditure cycles. Against this backdrop, International Combustion’s valuation improvement may reflect a market anticipation of a cyclical recovery or company-specific operational enhancements. However, investors should weigh these valuation gains against the company’s modest profitability metrics and recent price underperformance.

Comparing International Combustion to other industrial manufacturing stocks reveals a wide valuation dispersion, with some peers trading at premium multiples justified by stronger growth or profitability, while others remain expensive due to speculative factors. This environment underscores the importance of a nuanced approach to stock selection within the sector.

Investment Implications and Outlook

For investors considering International Combustion, the shift to an attractive valuation grade offers a potential entry point, especially for those with a longer-term horizon who can tolerate near-term volatility. The stock’s P/E and P/BV ratios suggest that the market may have over-discounted risks, creating a margin of safety.

However, the company’s low ROE and modest dividend yield indicate that operational improvements and earnings growth will be critical to justify any sustained re-rating. The downgrade to a ‘Strong Sell’ Mojo Grade also advises caution, signalling that quality and momentum factors currently weigh against the stock.

Investors should monitor upcoming quarterly results, management commentary on order inflows, and sectoral trends to gauge whether the valuation attractiveness translates into fundamental recovery. Additionally, comparing International Combustion’s metrics with peers and broader market indices will remain essential to assess relative performance and risk.

Conclusion

International Combustion (India) Ltd’s recent valuation shift from fair to attractive marks a significant development in its investment case. While the stock’s P/E of 32.31 and P/BV of 0.82 suggest improved price appeal, underlying profitability and market sentiment remain subdued. The company’s mixed financial metrics and a strong sell rating from MarketsMOJO counsel prudence, even as the valuation offers a potential opportunity for value investors willing to navigate sectoral challenges.

Ultimately, International Combustion’s attractiveness hinges on its ability to convert valuation gains into sustainable earnings growth and improved returns on equity, factors that will determine whether the stock can regain favour in a competitive industrial manufacturing landscape.

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