Iris Clothings Ltd Valuation Shifts Amidst Market Rally

Valuation Metrics: A Closer Examination

As of 10 Feb 2026, Iris Clothings Ltd trades at ₹36.68, marking an 8.20% increase from the previous close of ₹33.90. The stock’s 52-week high stands at ₹39.49, while the low is ₹20.73, indicating a substantial recovery and upward momentum over the past year. However, the valuation metrics reveal a more nuanced picture.

The company’s P/E ratio has surged to 48.44, a level that categorises it as very expensive relative to its historical averages and many of its peers in the Garments & Apparels sector. This is a marked increase from prior valuations when the stock was rated as expensive rather than very expensive. Similarly, the P/BV ratio is elevated at 5.21, signalling that investors are paying a premium over the company’s net asset value.

Other valuation multiples such as EV/EBIT (32.50) and EV/EBITDA (27.10) further corroborate the premium pricing. The PEG ratio, which factors in earnings growth, is also notably high at 48.44, suggesting that the stock’s price growth is not fully justified by its earnings growth prospects at present.

Peer Comparison Highlights Valuation Premium

When compared with key competitors in the Garments & Apparels industry, Iris Clothings Ltd’s valuation stands out as particularly stretched. For instance, Himatsingka Seide, a peer with a very attractive valuation, trades at a P/E of 8.33 and EV/EBITDA of 8.82, with a PEG ratio of just 0.18. This stark contrast highlights the premium investors are willing to pay for Iris Clothings despite its relatively moderate return metrics.

Other peers such as R&B Denims and SBC Exports also carry very expensive valuations, with P/E ratios of 46.33 and 48.33 respectively, and EV/EBITDA multiples of 34.37 and 50.97. However, Iris Clothings’ PEG ratio is significantly higher than these peers, indicating a less favourable growth-to-price balance.

Companies like Sportking India and Indo Rama Synthetic, rated as attractive, trade at much lower multiples, reinforcing the notion that Iris Clothings is priced at a premium within its sector.

Financial Performance and Returns: Contextualising Valuation

Despite the lofty valuation, Iris Clothings has delivered mixed returns over various time horizons. The stock outperformed the Sensex over the past week and month, with returns of 10.22% and 8.17% respectively, compared to the Sensex’s 3.10% and 0.72%. Over the one-year period, the stock posted a robust 25.25% return, significantly ahead of the Sensex’s 9.79%.

However, longer-term returns paint a more cautious picture. Over three years, Iris Clothings has declined by 76.6%, while the Sensex gained 44.56%. Over five years, the stock’s 18.42% return lags behind the Sensex’s 71.20%. This disparity suggests that the recent rally and valuation expansion may be driven more by short-term optimism than sustained fundamental improvement.

Return on capital employed (ROCE) and return on equity (ROE) stand at 13.53% and 10.76% respectively, indicating moderate profitability but not at levels that typically justify such high multiples.

Valuation Grade Upgrade and Market Sentiment

MarketsMOJO recently upgraded Iris Clothings Ltd’s mojo grade from Sell to Hold on 28 Jan 2026, reflecting a cautious improvement in sentiment. The mojo score now stands at 51.0, signalling a neutral stance. The market cap grade is 4, indicating a mid-sized company with moderate liquidity and investor interest.

Despite the upgrade, the valuation grade shifted from expensive to very expensive, underscoring that the stock’s price appreciation has outpaced earnings and book value growth. Investors should be wary of the stretched multiples, especially given the company’s mixed long-term performance and moderate return ratios.

Sector and Market Context

The Garments & Apparels sector has seen varied valuation trends, with some companies trading at attractive levels due to strong fundamentals and growth prospects, while others remain expensive. Iris Clothings’ valuation premium places it among the more costly stocks in the sector, which may limit upside potential unless earnings growth accelerates significantly.

In the broader market context, the Sensex’s steady gains over the past year and decade highlight the importance of aligning stock selection with sustainable growth and reasonable valuations. Iris Clothings’ recent price momentum is encouraging but should be weighed against its valuation stretch and historical volatility.

Investor Takeaway: Balancing Valuation and Growth Prospects

For investors considering Iris Clothings Ltd, the current valuation demands careful scrutiny. The very expensive P/E and P/BV ratios suggest that the market is pricing in strong future growth, yet the company’s historical returns and profitability metrics do not fully support this optimism.

Comparisons with peers reveal that more attractively valued companies exist within the Garments & Apparels sector, offering potentially better risk-reward profiles. The recent mojo grade upgrade to Hold indicates a neutral stance, reflecting both the stock’s recovery and valuation concerns.

Ultimately, investors should weigh the stock’s recent price momentum against its stretched valuation and moderate return on capital. Monitoring earnings growth and sector dynamics will be crucial to assess whether Iris Clothings can justify its premium pricing over the medium to long term.

Summary of Key Metrics:

• Current Price: ₹36.68
• P/E Ratio: 48.44 (Very Expensive)
• P/BV Ratio: 5.21
• EV/EBITDA: 27.10
• PEG Ratio: 48.44
• ROCE: 13.53%
• ROE: 10.76%
• Mojo Score: 51.0 (Hold)
• Market Cap Grade: 4
• 1-Year Return: 25.25% vs Sensex 9.79%
• 3-Year Return: -76.6% vs Sensex 44.56%

Investors should remain vigilant and consider valuation alongside fundamental performance before committing fresh capital to Iris Clothings Ltd.

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