Is Ambika Cotton overvalued or undervalued?

As of 25 August 2025, the valuation grade for Ambika Cotton has moved from expensive to fair. The company is currently fairly valued, with a PE ratio of 13.62, a Price to Book Value of 0.91, and an EV to EBITDA ratio of 6.87. In comparison to its peers, K P R Mill Ltd is classified as very expensive with a PE ratio of 42.18, while Vardhman Textile is also fairly valued with a PE ratio of 14.07.
Despite the fair valuation, Ambika Cotton has underperformed relative to the Sensex, with a year-to-date return of -11.73% compared to the Sensex's 4.48%. This underperformance, along with a dividend yield of 2.45% and a ROCE of 10.82%, suggests that while the stock is fairly valued, it may face challenges in generating investor interest in the near term.