Valuation Metrics Indicate Elevated Pricing
As of early December 2025, Trident Texofab’s valuation grade moved from expensive to very expensive. The company’s price-to-earnings (PE) ratio stands at an exceptionally high 171.99, signalling that investors are paying a substantial premium for each unit of earnings. This is further emphasised by a price-to-book (P/B) ratio of 8.95, which is well above typical industry averages, suggesting that the stock price is significantly higher than the company’s net asset value.
Enterprise value multiples also reflect this elevated pricing. The EV to EBIT ratio is 82.13, and EV to EBITDA is 65.76, both indicating that the market values the company at many times its operating profits. The PEG ratio, which adjusts the PE ratio for earnings growth, is an eye-catching 18.66, far exceeding the conventional benchmark of 1 to 2 that typically denotes fair value. This suggests that the stock’s price growth expectations are extremely optimistic relative to its earnings growth.
Operational Efficiency and Returns
Despite lofty valuation multiples, Trident Texofab’s operational returns are modest. The latest return on capital employed (ROCE) is 7.44%, and return on equity (ROE) is 5.20%. These figures are relatively low for a company commanding such a high valuation, implying that the company’s profitability and capital efficiency do not fully justify the premium investors are paying. Additionally, the absence of a dividend yield may deter income-focused investors, further emphasising reliance on capital appreciation for returns.
This week's revealed pick, a Large Cap from Public Banks with TARGET PRICE, is already showing movement! Get the complete analysis before it's too late.
- - Target price included
- - Early movement detected
- - Complete analysis ready
Peer Comparison Highlights Relative Valuation
When compared with peers in the garments and apparels sector, Trident Texofab’s valuation remains on the higher end. While several companies in the sector are also rated very expensive, Trident’s PE and EV/EBITDA ratios are among the highest, surpassed only by a few outliers. For instance, Elitecon International exhibits an even higher PE ratio, but many other peers trade at more moderate multiples, reflecting a range of valuation perspectives within the industry.
Notably, some companies such as PTC India are classified as very attractive with much lower PE and EV/EBITDA ratios, indicating potentially better value propositions. This contrast suggests that while Trident Texofab has delivered strong growth, investors may find more reasonably priced opportunities elsewhere in the sector.
Market Performance and Price Movements
Trident Texofab’s stock price has demonstrated remarkable returns over the medium to long term. The year-to-date return exceeds 100%, and the one-year return surpasses 165%, significantly outperforming the Sensex benchmark, which has returned just over 5% in the same period. Over five years, the stock has delivered nearly 1,000% gains, dwarfing the Sensex’s 89% return.
However, recent short-term performance shows a slight decline, with the stock down 0.7% over the past month compared to a 2.16% gain in the Sensex. This could indicate some near-term profit-taking or market hesitation given the stretched valuation levels.
Price volatility is also evident, with the 52-week high at ₹379 and a low of ₹125, reflecting significant price swings. The current price near ₹340 is closer to the upper end of this range, reinforcing the notion that the stock is trading at a premium.
Why settle for Trident Texofab? SwitchER evaluates this Garments & Apparels Microcap against peers, other sectors, and market caps to find you superior investment opportunities!
- - Comprehensive evaluation done
- - Superior opportunities identified
- - Smart switching enabled
Conclusion: Overvalued Despite Strong Growth
In summary, Trident Texofab’s current valuation metrics strongly suggest that the stock is overvalued. The very high PE, EV/EBITDA, and PEG ratios, combined with modest returns on capital, indicate that the market is pricing in exceptionally optimistic growth expectations. While the company’s historical stock performance has been outstanding, the premium valuation leaves limited margin of safety for new investors.
Investors should weigh the company’s growth prospects against these stretched multiples and consider alternative opportunities within the sector or broader market that offer more attractive valuations. Caution is warranted given the risk of valuation correction, especially if earnings growth fails to meet lofty market expectations.
For those already invested, monitoring operational performance and market sentiment closely will be crucial to managing risk in this richly priced stock.
Get 2 full years of MojoOne Premium for only Rs. 12,999. Subscribe for 1 year and we'll add another year FREE. Offer valid for a limited time. Start Saving Now →
