Valuation Metrics and Market Positioning
Kross Ltd currently trades at a price of ₹180.00, marking a day change of 3.36% from the previous close of ₹174.15. The stock's 52-week price range spans from ₹131.15 to ₹237.15, indicating a considerable price band over the past year. The company’s market capitalisation is graded at 4, situating it within the mid-cap segment of the market.
Examining valuation parameters, the price-to-earnings (P/E) ratio stands at 23.44, while the price-to-book value (P/BV) ratio is 2.67. These figures suggest a shift in the stock’s valuation from previously very attractive levels to a more attractive zone, signalling a change in market assessment. The enterprise value to EBITDA (EV/EBITDA) ratio is recorded at 14.33, with the enterprise value to EBIT at 15.95, both metrics providing insight into the company’s operational earnings relative to its valuation.
Return on capital employed (ROCE) and return on equity (ROE) are important indicators of operational efficiency and shareholder returns. Kross Ltd’s latest ROCE is 19.42%, while ROE is 11.40%, figures that reflect the company’s capacity to generate returns from its capital base and equity investments respectively.
Comparative Analysis with Industry Peers
When compared with peers in the Auto Components & Equipments sector, Kross Ltd’s valuation metrics present a distinct profile. For instance, Rico Auto Industries and Alicon Castalloy exhibit P/E ratios of 37.97 and 38.94 respectively, both higher than Kross Ltd’s 23.44. Similarly, their EV/EBITDA ratios are 11.11 and 9.25, lower than Kross Ltd’s 14.33, indicating differences in operational earnings relative to enterprise value.
Other companies such as The Hi-Tech Gear and RACL Geartech show P/E ratios of 44.42 and 37.29, with EV/EBITDA ratios of 12.49 and 17.08 respectively. These comparisons highlight that Kross Ltd’s valuation sits in a relatively moderate range within its sector, neither at the extremes of very expensive nor very attractive valuations.
Interestingly, Auto Components of Goa is classified as very attractive with a P/E of 17.27 and EV/EBITDA of 14.60, while Jay Bharat Manufacturing is also attractive with a P/E of 14.16 and EV/EBITDA of 7.05. These figures provide a broader context for investors analysing valuation attractiveness across the sector.
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Stock Performance Relative to Market Benchmarks
Over recent periods, Kross Ltd’s stock returns have shown varied performance relative to the Sensex benchmark. In the last week, Kross Ltd recorded a return of 10.87%, significantly outpacing the Sensex’s 0.02% return. However, over the last month, the stock’s return was -1.37%, slightly below the Sensex’s 0.14% gain.
Year-to-date (YTD) figures indicate a decline of 15.49% for Kross Ltd, contrasting with the Sensex’s positive 8.37% return. Over the one-year horizon, the stock’s return was -18.63%, while the Sensex posted a 3.59% gain. Longer-term data for three, five, and ten years is not available for Kross Ltd, but the Sensex’s returns over these periods have been 38.05%, 81.46%, and 232.15% respectively, underscoring the broader market’s growth trajectory.
Insights on Valuation Shifts and Market Assessment
The recent revision in Kross Ltd’s evaluation metrics, particularly the shift in valuation grade from very attractive to attractive, suggests a nuanced change in market perception. The P/E ratio of 23.44, while moderate within the sector, indicates that investors are pricing in a balanced outlook on earnings growth and risk. The P/BV ratio of 2.67 also reflects a valuation that is neither undervalued nor excessively premium compared to book value.
Enterprise value multiples such as EV/EBITDA and EV/EBIT provide additional layers of analysis, showing how the market values the company’s earnings before interest, taxes, depreciation, and amortisation. Kross Ltd’s EV/EBITDA of 14.33 is positioned between peers with lower and higher multiples, suggesting a middle ground in operational valuation.
These valuation parameters, combined with solid returns on capital employed and equity, indicate that Kross Ltd remains a significant player within the auto components sector, though market participants appear to be reassessing its relative attractiveness amid sectoral and macroeconomic factors.
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Sector Outlook and Investor Considerations
The Auto Components & Equipments sector continues to navigate a complex environment shaped by evolving automotive technologies, supply chain challenges, and shifting consumer demand. Within this context, valuation adjustments such as those observed for Kross Ltd provide important signals for investors seeking to balance growth potential with risk exposure.
While Kross Ltd’s current valuation metrics place it in an attractive category relative to some peers, the stock’s recent price performance and returns relative to the Sensex suggest that investors are weighing sector-specific factors alongside broader market trends. The company’s operational efficiency, as reflected in ROCE and ROE, remains a positive attribute, supporting its capacity to generate shareholder value over time.
Investors analysing Kross Ltd should consider these valuation shifts in conjunction with fundamental company performance and sectoral developments. The moderate P/E and P/BV ratios, combined with enterprise value multiples, offer a framework for assessing the stock’s price attractiveness in the current market environment.
Conclusion
Kross Ltd’s recent changes in valuation parameters highlight a shift in market assessment that reflects both company-specific factors and broader sector dynamics. The movement from very attractive to attractive valuation grades, supported by detailed financial metrics, provides a nuanced picture of the stock’s current standing. Comparative analysis with industry peers and performance relative to the Sensex further contextualise these changes, offering investors a comprehensive view of Kross Ltd’s market position.
As the auto components sector continues to evolve, ongoing monitoring of valuation metrics and operational performance will be essential for informed investment decisions. Kross Ltd’s current profile suggests a balanced valuation perspective, with potential opportunities and risks that merit careful consideration.
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