Is Manaksia Alumi. overvalued or undervalued?

Valuation Metrics and Financial Health

Manaksia Aluminium trades at a price-to-earnings (PE) ratio of approximately 25.9, which is higher than some peers like Vedanta but lower than others such as Hindustan Copper and Gravita India. Its price-to-book value stands at 1.21, indicating the stock is priced just above its net asset value, a sign of moderate market confidence in its asset base.

The enterprise value to EBITDA (EV/EBITDA) ratio of 8.48 is relatively low compared to many competitors, suggesting the company is reasonably priced relative to its earnings before interest, taxes, depreciation, and amortisation. Similarly, the EV to EBIT ratio of 10.61 supports this view, reflecting efficient operational profitability.

Return on capital employed (ROCE) at 9.78% and return on equity (ROE) at 4.67% indicate moderate returns generated on the company’s capital and equity base. While these returns are not exceptionally high, they are consistent with industry norms for non-ferrous metals companies.

Peer Comparison Highlights

When compared with its peers, Manaksia Aluminium’s valuation is classified as very attractive, especially against companies like Hindustan Zinc and Hindustan Copper, which are deemed very expensive. Vedanta, another major player, also holds a very attractive valuation but with a significantly lower PE and PEG ratio, reflecting different growth expectations.

Manaksia’s PEG ratio of 1.19 suggests that its price is fairly aligned with its earnings growth prospects, neither excessively overvalued nor undervalued. This contrasts with some peers whose PEG ratios indicate overvaluation or speculative pricing.

Market Performance and Price Movements

Manaksia Aluminium’s current share price hovers around ₹25.01, down slightly from the previous close of ₹25.35. The stock has experienced a significant correction over the year, with a year-to-date return of -21.05%, underperforming the Sensex’s positive 9.68% return over the same period. Even over the last month and week, the stock has declined by 12.34% and 4.87% respectively, while the broader market has shown modest gains.

However, looking at a longer horizon, the company has delivered robust returns, with a five-year gain of 243.07% and a ten-year return of 291.39%, both comfortably exceeding the Sensex’s respective returns of 94.13% and 228.02%. This long-term outperformance suggests that despite recent volatility, Manaksia Aluminium has demonstrated strong growth and value creation over time.

Industry Context and Future Outlook

The non-ferrous metals sector is cyclical and sensitive to global commodity prices, demand fluctuations, and regulatory changes. Manaksia Aluminium’s valuation metrics reflect a cautious optimism, balancing current market headwinds with its underlying fundamentals. The company’s moderate dividend yield of 0.28% indicates a focus on reinvestment and growth rather than income distribution, which may appeal to growth-oriented investors.

Conclusion: Is Manaksia Aluminium Overvalued or Undervalued?

Based on the latest valuation grade upgrade to very attractive, Manaksia Aluminium appears undervalued relative to its intrinsic worth and peer group. Its reasonable PE and EV/EBITDA ratios, combined with a fair PEG ratio, suggest the stock is priced attractively given its earnings growth potential. While recent price declines and underperformance versus the Sensex may raise concerns, the company’s strong long-term returns and solid fundamentals provide a compelling case for value investors.

Investors should, however, remain mindful of sector cyclicality and monitor commodity price trends closely. For those seeking exposure to the non-ferrous metals space with a focus on value and growth, Manaksia Aluminium offers a promising proposition at current levels.

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