Lehar Footwears Ltd Valuation Shifts to Very Attractive Amid Market Challenges

Valuation Metrics Signal Enhanced Price Attractiveness

Lehar Footwears currently trades at a price of ₹222.25, down 1.22% from its previous close of ₹225.00. The stock’s 52-week range spans from ₹193.00 to ₹322.20, indicating significant volatility over the past year. However, the recent recalibration of valuation grades by MarketsMOJO has upgraded Lehar Footwears’ valuation from "attractive" to "very attractive," primarily driven by its current price-to-earnings (P/E) ratio of 18.04 and price-to-book value (P/BV) of 3.12.

These figures stand out favourably when compared to the footwear sector and select peers. For instance, Bhartiya International, another footwear player, trades at a higher P/E of 33.37 and a similar "very attractive" valuation grade, while Superhouse Ltd, also rated very attractive, has a P/E of 29.7. Lehar’s relatively lower P/E suggests the stock is trading at a discount to earnings compared to these peers, potentially offering better value for investors seeking exposure to the footwear industry.

Moreover, Lehar’s enterprise value to EBITDA (EV/EBITDA) ratio of 10.87 is competitive within the sector, indicating efficient operational earnings relative to its enterprise value. This is particularly notable against Superhouse Ltd’s EV/EBITDA of 7.81 and Bhartiya International’s 13.04, placing Lehar in a balanced position between operational efficiency and valuation.

Financial Performance and Returns Contextualise Valuation

Lehar Footwears’ return on capital employed (ROCE) stands at a robust 19.91%, while return on equity (ROE) is 17.29%, underscoring the company’s effective utilisation of capital and shareholder funds. These returns are healthy indicators of operational profitability and management efficiency, supporting the improved valuation stance.

However, the stock’s recent price performance has lagged broader market indices. Over the past year, Lehar Footwears has declined by 13.82%, contrasting with the Sensex’s 8.51% gain. Despite this, the company’s longer-term returns remain impressive, with a three-year return of 149.58% and a five-year return exceeding 976%, significantly outperforming the Sensex’s respective 40.02% and 77.96% gains. This long-term outperformance may justify the current valuation upgrade, as the market potentially prices in sustained growth prospects.

Comparative Valuation and Risk Assessment

When benchmarked against other footwear companies, Lehar Footwears’ valuation metrics present a more conservative risk profile. Several peers, including Agribio Spirits and AKI India, are classified as "risky" due to elevated P/E ratios or negative EV/EBITDA values, signalling operational or financial distress. In contrast, Lehar’s PEG ratio of 0.07 is exceptionally low, indicating that the stock’s price growth is not outpacing earnings growth, a positive sign for value investors.

Dividend yield remains modest at 0.23%, reflecting a focus on reinvestment and growth rather than income distribution. This aligns with the company’s strategy to capitalise on expanding market opportunities within the footwear sector, which has seen fluctuating demand patterns amid economic uncertainties.

Market Sentiment and Recent Grade Revision

MarketsMOJO’s recent downgrade of Lehar Footwears’ overall Mojo Grade from "Buy" to "Hold" on 12 Nov 2025 reflects a cautious stance amid short-term price pressures and sector headwinds. The current Mojo Score of 57.0 suggests moderate confidence in the stock’s near-term prospects, balancing valuation attractiveness against market volatility and competitive pressures.

Despite this, the upgrade in valuation grade to "very attractive" highlights a nuanced view: while the stock may face short-term challenges, its underlying price metrics and financial health offer a compelling case for investors with a medium to long-term horizon.

Sector Outlook and Strategic Considerations

The footwear industry continues to navigate supply chain disruptions and shifting consumer preferences. Lehar Footwears’ ability to maintain strong ROCE and ROE metrics amid these challenges is a testament to its operational resilience. Investors should weigh these fundamentals against the stock’s recent price weakness and broader market trends.

Given the stock’s 52-week high of ₹322.20 and current price near ₹222.25, there is a significant margin of safety for value-oriented investors. The improved valuation parameters suggest that the market may be underestimating the company’s growth potential or over-discounting sector risks.

Investor Takeaway

Lehar Footwears Ltd’s shift to a very attractive valuation grade, supported by a P/E ratio of 18.04 and a P/BV of 3.12, presents a compelling case for investors seeking value in the footwear sector. While the stock’s recent price performance has been subdued relative to the Sensex, its strong long-term returns and solid financial metrics provide a foundation for potential recovery and growth.

Investors should consider the company’s operational efficiency, reflected in its ROCE and ROE, alongside the broader sector dynamics and competitive landscape. The downgrade to a "Hold" rating signals prudence in the near term, but the valuation improvement suggests that Lehar Footwears remains a stock worth monitoring closely for medium- to long-term portfolio inclusion.

As always, diversification and alignment with individual risk tolerance remain key when evaluating mid-cap stocks in cyclical industries such as footwear.

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