Lehar Footwears Ltd Valuation Shifts Signal Changing Market Sentiment

Valuation Metrics Reflect Improved Price Attractiveness

Lehar Footwears currently trades at a price of ₹225.00, down 3.43% from the previous close of ₹233.00. The stock’s 52-week range spans from ₹193.00 to ₹322.20, indicating a significant volatility band over the past year. The recent valuation grade upgrade from very attractive to attractive is primarily driven by its price-to-earnings (P/E) ratio settling at 18.31 and a price-to-book value (P/BV) of 3.16. These figures suggest a more balanced valuation relative to earnings and net asset value than previously assessed.

Historically, Lehar Footwears’ P/E ratio has oscillated in a wider range, but the current 18.31 multiple is modest when compared to the broader footwear sector and select peers. For instance, Bhartiya International trades at a higher P/E of 32.14, while Superhouse Ltd, despite being rated very attractive, commands a P/E of 29.63. This positions Lehar Footwears as a comparatively more affordable option within its industry segment.

Peer Comparison Highlights Relative Valuation Strength

When benchmarked against its footwear industry peers, Lehar Footwears’ valuation metrics reveal a nuanced picture. The company’s enterprise value to EBITDA (EV/EBITDA) ratio stands at 11.11, which is lower than Bhartiya International’s 13.96 but higher than Superhouse Ltd’s 7.37. This intermediate positioning suggests that while Lehar Footwears is not the cheapest in terms of operational earnings valuation, it remains competitively priced.

Moreover, the PEG ratio of 0.09 indicates that the stock is trading at a significant discount relative to its earnings growth potential, a factor that often appeals to value-oriented investors. This contrasts with some peers like Agribio Spirits, which, despite a high P/E of 73.66, is considered risky due to negative EV/EBITDA and volatile earnings.

Financial Performance and Returns Contextualise Valuation

Lehar Footwears’ return metrics over various periods provide further insight into its valuation. The stock has delivered an impressive 5-year return of 920.41%, vastly outperforming the Sensex’s 59.83% over the same timeframe. Even over three years, the stock’s 158.47% gain dwarfs the Sensex’s 35.81%. However, more recent performance has been subdued, with a 1-year return of -7.67% compared to the Sensex’s positive 9.66%, and a year-to-date flat return against the Sensex’s -2.28% decline.

This divergence suggests that while the stock has historically rewarded long-term investors handsomely, short-term headwinds and sector pressures have tempered enthusiasm, contributing to the recent price correction and valuation reassessment.

Quality Metrics Support Attractive Valuation

Lehar Footwears’ operational efficiency and profitability ratios underpin its valuation appeal. The company’s return on capital employed (ROCE) stands at a robust 19.91%, while return on equity (ROE) is a healthy 17.25%. These figures indicate effective capital utilisation and shareholder value creation, which justify a valuation premium relative to less efficient peers.

Dividend yield remains modest at 0.22%, reflecting a focus on reinvestment and growth rather than income distribution. The enterprise value to capital employed ratio of 2.52 and EV to sales of 1.00 further reinforce the company’s balanced valuation profile.

Market Sentiment and Rating Changes

MarketsMOJO’s recent downgrade of Lehar Footwears from a Hold to a Sell rating, accompanied by a Mojo Score of 48.0, signals caution among analysts despite the improved valuation grade. The market capitalisation grade remains low at 4, reflecting the company’s micro-cap status and associated liquidity and volatility risks.

The downgrade on 16 Feb 2026 likely reflects concerns over near-term earnings visibility and sector headwinds, which have pressured the stock price and tempered investor sentiment. Nonetheless, the valuation shift to attractive suggests that the stock may be nearing a more reasonable entry point for value investors willing to tolerate short-term volatility.

Sector and Industry Outlook

The footwear sector continues to face mixed dynamics, with rising raw material costs and supply chain disruptions offsetting demand recovery in domestic and export markets. Lehar Footwears’ valuation improvement may partly reflect market anticipation of stabilising input costs and a potential rebound in consumer spending.

However, competition remains intense, with larger players like Superhouse Ltd and Bhartiya International maintaining stronger market positions and higher valuations. Investors should weigh Lehar Footwears’ attractive valuation against these competitive pressures and the company’s micro-cap risks.

Investment Implications

For investors, the shift in Lehar Footwears’ valuation grade to attractive offers a compelling entry point relative to its historical multiples and peer group. The company’s solid ROCE and ROE metrics, combined with a low PEG ratio, suggest potential for earnings growth at a reasonable price.

Nonetheless, the recent downgrade to a Sell rating and the stock’s underperformance over the past year caution that risks remain. Investors should consider their risk tolerance and investment horizon carefully, monitoring sector developments and company earnings updates closely.

Conclusion

Lehar Footwears Ltd’s valuation parameters have improved, reflecting a more attractive price level relative to earnings and book value. While the stock has experienced short-term price weakness and a rating downgrade, its long-term returns and quality metrics support a cautiously optimistic outlook. The company’s valuation now compares favourably with peers, offering potential value for investors prepared to navigate sector challenges and micro-cap volatility.

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