Is Axita Cotton overvalued or undervalued?

As of 12 August 2025, Axita Cotton's valuation grade has moved from very expensive to risky, indicating a significant shift in its financial outlook. The company appears to be overvalued at its current price of 8.80, especially considering its troubling PE ratio of -198.73 and EV to EBITDA of -65.31. The price to book value stands at 4.87, which further suggests that the stock is trading at a premium compared to its book value.
In comparison to peers, Axita Cotton's valuation metrics are starkly unfavorable. For instance, K P R Mill Ltd is categorized as very expensive with a PE ratio of 39.59, while Trident, which is rated fair, has a PE ratio of 32.59. This highlights that Axita Cotton is not only underperforming relative to its peers but also carries a higher risk profile. The company's recent stock performance has been poor, with a year-to-date return of -20.07%, contrasting sharply with the Sensex's positive return of 2.68% during the same period.