Lakshmi Finance & Industrial Corporation Ltd: Valuation Shifts Signal Renewed Price Attractiveness

Valuation Metrics Reflect a More Balanced Outlook

As of 25 Feb 2026, Lakshmi Finance & Industrial Corporation Ltd trades at a price of ₹128.57, down 2.24% from the previous close of ₹131.52. The stock’s 52-week range spans from ₹112.99 to ₹250.50, indicating significant volatility over the past year. The company’s price-to-earnings (P/E) ratio currently stands at 32.03, a marked improvement from levels that previously classified it as expensive. This P/E multiple now aligns more closely with a fair valuation grade, suggesting that the market has adjusted expectations in light of recent performance and sector dynamics.

In addition, the price-to-book value (P/BV) ratio is at 0.64, which is notably below 1, indicating that the stock is trading below its book value. This could be interpreted as a sign of undervaluation or reflect concerns about asset quality or profitability. The enterprise value to EBITDA (EV/EBITDA) ratio is 31.91, which remains elevated but consistent with the P/E multiple, signalling that investors are still pricing in growth potential despite recent setbacks.

Comparative Analysis with Peers Highlights Relative Attractiveness

When compared with its NBFC peers, Lakshmi Finance & Industrial Corporation Ltd’s valuation appears more reasonable. For instance, Mufin Green trades at a very expensive P/E of 101.46, while Ashika Credit’s P/E ratio is an even more stretched 170.14. Satin Creditcare and SMC Global Securities, on the other hand, are rated as attractive with P/E ratios of 8.85 and 19.53 respectively, indicating a wide valuation spectrum within the sector.

It is important to note that some peers such as LKP Finance and Avishkar Infra are classified as risky due to loss-making operations, which further accentuates Lakshmi Finance’s relative stability despite its challenges. The company’s PEG ratio remains at zero, reflecting either flat or negative earnings growth expectations, which investors should monitor closely.

Financial Performance and Returns Paint a Mixed Picture

Financially, Lakshmi Finance & Industrial Corporation Ltd’s return on capital employed (ROCE) is negative at -8.73%, while return on equity (ROE) is modestly positive at 1.98%. These figures highlight ongoing profitability pressures and operational inefficiencies that have weighed on investor sentiment. The dividend yield of 2.34% offers some income cushion, but it may not be sufficient to offset concerns about growth and returns.

Examining stock returns relative to the benchmark Sensex reveals underperformance across most time frames. Year-to-date, the stock has declined by 24.92%, compared to a modest 2.70% gain in the Sensex. Over one year, the stock has fallen 29.39%, while the Sensex gained 12.73%. Longer-term returns over five and ten years remain positive at 63.26% and 269.99% respectively, but lag the Sensex’s 69.70% and 262.24% gains, indicating that the stock has struggled to keep pace with broader market growth in recent periods.

Market Capitalisation and Mojo Score Indicate Elevated Risk

The company’s market capitalisation grade is rated 4 on a scale where lower numbers indicate larger, more stable companies. This suggests Lakshmi Finance is a smaller-cap entity with potentially higher volatility. The Mojo Score, a proprietary metric assessing overall stock quality and risk, stands at 20.0, with a Mojo Grade of Strong Sell as of 3 Nov 2025, downgraded from Sell. This downgrade reflects deteriorating fundamentals and heightened risk perceptions among investors and analysts.

Such a low Mojo Score signals caution for investors, as it incorporates multiple factors including valuation, financial health, and price momentum. The downgrade to Strong Sell underscores the need for careful scrutiny before initiating or maintaining positions in the stock.

Sectoral Context and Broader NBFC Challenges

The NBFC sector has faced headwinds recently, including tighter credit conditions, regulatory scrutiny, and slower economic growth impacting asset quality. Lakshmi Finance’s valuation adjustment to a fair grade can be seen as a market response to these sector-wide pressures. While the stock’s valuation is no longer expensive, the underlying fundamentals remain under strain, as evidenced by negative ROCE and subdued returns.

Investors should weigh the company’s relative valuation improvement against ongoing operational challenges and sector risks. The stock’s current P/E and P/BV ratios suggest some price attractiveness compared to peers, but the risk profile remains elevated given profitability concerns and recent price underperformance.

Investor Takeaway: Valuation Improvement Offers Cautious Optimism

In summary, Lakshmi Finance & Industrial Corporation Ltd’s shift from an expensive to a fair valuation grade marks a significant development for investors seeking value in the NBFC space. The current P/E of 32.03 and P/BV of 0.64 suggest the stock is more reasonably priced relative to its historical premium and some overvalued peers. However, the company’s negative ROCE, modest ROE, and recent price underperformance relative to the Sensex highlight ongoing challenges.

Investors should consider the stock’s strong sell Mojo Grade and weigh the risks of subdued profitability and sector headwinds against the potential for a turnaround. The company’s dividend yield of 2.34% provides some income support, but the overall risk-reward profile remains cautious.

For those interested in NBFC investments, a thorough peer comparison and quality assessment remain essential. While Lakshmi Finance’s valuation has become more attractive, superior options may exist within the sector that offer better growth prospects and financial stability.

Long-Term Performance Context

Despite recent setbacks, Lakshmi Finance has delivered a 10-year return of 269.99%, slightly outperforming the Sensex’s 262.24% over the same period. This long-term performance indicates resilience and potential value for patient investors. However, the stock’s short- and medium-term returns have lagged significantly, with a 1-year decline of 29.39% versus a 12.73% gain in the Sensex, underscoring the importance of timing and risk management in portfolio decisions.

Conclusion

Lakshmi Finance & Industrial Corporation Ltd’s valuation adjustment to a fair grade reflects a recalibration of market expectations amid sectoral challenges and company-specific issues. While the stock’s price metrics now appear more reasonable, the fundamental risks and negative profitability metrics warrant a cautious approach. Investors should monitor operational improvements, sector developments, and peer valuations closely before committing capital.

Given the current strong sell rating and low Mojo Score, the stock may be more suitable for risk-tolerant investors with a long-term horizon who believe in a potential turnaround. Others may prefer to explore alternative NBFC stocks with stronger fundamentals and more attractive valuations.

Limited Period Only. Start at Rs. 9,999 - Get MojoOne for 1 Year + 3 Months FREE (60% Off) Get 71% Off →