Is Ambika Cotton overvalued or undervalued?

As of 11 July 2025, the valuation grade for Ambika Cotton has moved from attractive to fair, indicating a shift in its market perception. The company appears to be fairly valued at this time. Key ratios include a PE ratio of 14.06, an EV to EBITDA of 7.44, and a PEG ratio of 3.21, which suggest that while the company is not undervalued, it also does not exhibit signs of being overvalued relative to its earnings growth potential.
In comparison to its peers, Ambika Cotton's valuation metrics are significantly lower than those of K P R Mill Ltd, which has a PE ratio of 50.25, indicating it is very expensive, and Vardhman Textile, which is priced at a PE of 16.26, considered expensive as well. While Ambika Cotton has shown a positive return of 2.78% over the past week compared to a -1.12% return for the Sensex, its longer-term performance has lagged behind the index, particularly over the 1-year and 3-year periods. This context reinforces the conclusion that Ambika Cotton is fairly valued in the current market environment.