Is Ambika Cotton overvalued or undervalued?

As of 18 July 2025, Ambika Cotton's valuation grade has moved from expensive to fair. The company is currently fairly valued based on its financial metrics, with a PE ratio of 14.06, a Price to Book Value of 1.02, and an EV to EBITDA ratio of 7.44. These ratios suggest that the company's valuation is aligned with its earnings and book value, indicating a balanced market perception.
In comparison to its peers, Ambika Cotton's PE ratio is significantly lower than K P R Mill Ltd, which is rated as very expensive with a PE of 49.61, while Trident, also rated as fair, has a PE of 43.41. This positions Ambika Cotton favorably within the industry, especially considering its ROCE of 10.82% and ROE of 7.27%. Although the stock has faced challenges recently, with a year-to-date return of -0.31% compared to the Sensex's 4.63%, its long-term performance over five years shows a robust return of 141.17%, reinforcing its potential as a solid investment.