Is Ambika Cotton overvalued or undervalued?

As of 2 July 2025, the valuation grade for Ambika Cotton has moved from expensive to attractive, indicating a significant shift in its perceived value. The company is currently considered undervalued based on its financial metrics. Key ratios include a PE ratio of 13.81, an EV to EBITDA of 7.27, and a Price to Book Value of 1.00, which suggest that the stock is trading at a reasonable price relative to its earnings and assets.
In comparison with peers, Ambika Cotton's valuation stands out favorably against K P R Mill Ltd, which is rated as very expensive with a PE ratio of 46.67, and Vardhman Textile, which is considered expensive with a PE of 16.45. This peer analysis reinforces the attractiveness of Ambika Cotton's valuation. Additionally, while the stock has underperformed the Sensex on a year-to-date basis, it has shown resilience over a five-year period, with a return of 133.11% compared to the Sensex's 132.70%.