Loyal Equipments Ltd Valuation Shifts Signal Renewed Price Attractiveness

Valuation Metrics Show Marked Improvement

As of 2 Feb 2026, Loyal Equipments trades at a price of ₹162.00, down 5.81% on the day from a previous close of ₹172.00. The stock’s 52-week range spans from ₹157.00 to ₹363.90, indicating significant volatility over the past year. However, the recent valuation recalibration has been driven primarily by key multiples that now position the company as very attractively valued within its sector.

The company’s price-to-earnings (P/E) ratio currently stands at 19.64, a level that is notably lower than several industrial manufacturing peers such as Gala Precision Engineering (P/E 35.22) and Indef Manufacturers (P/E 27.01), yet slightly higher than Bharat Wire’s 15.54. This P/E multiple suggests that Loyal Equipments is trading at a discount relative to some of the more expensive players in the industry, signalling potential undervaluation.

Price-to-book value (P/BV) is at 3.29, which, while not the lowest in the peer group, remains reasonable given the company’s return on equity (ROE) of 16.75%. This ROE figure indicates efficient capital utilisation, supporting the valuation level. Additionally, the enterprise value to EBITDA (EV/EBITDA) ratio of 12.52 compares favourably against peers like Eimco Elecon (24.43) and Gala Precision Engineering (25.38), reinforcing the notion of relative value.

Comparative Peer Analysis Highlights Relative Strength

When benchmarked against its industrial manufacturing peers, Loyal Equipments’ valuation stands out as very attractive. Several competitors are classified as expensive or very expensive, with some even flagged as risky due to loss-making operations, such as Walchand Industries and Electrotherm India. Loyal Equipments’ stable profitability metrics and positive return ratios contribute to its improved valuation grade.

Its EV to capital employed ratio of 3.25 and EV to sales of 2.42 further underscore operational efficiency and a balanced capital structure. The company’s return on capital employed (ROCE) of 21.39% is robust, signalling strong earnings generation from capital investments, which is a positive sign for long-term investors.

Despite a modest dividend yield of 0.62%, the company’s growth prospects and operational metrics justify the current valuation. The PEG ratio is reported as zero, which may indicate either a lack of consensus growth estimates or a conservative outlook, warranting further monitoring by investors.

Stock Performance Versus Sensex: A Mixed Picture

While valuation metrics have improved, Loyal Equipments’ recent price performance has lagged behind the broader market. Year-to-date, the stock has declined by 16.19%, compared to a 5.28% gain in the Sensex. Over the past month, the stock fell 17.89%, significantly underperforming the Sensex’s 4.67% decline. Even on a one-year basis, the stock is down 32.85%, whereas the Sensex has appreciated by 5.16%.

However, the longer-term returns tell a more encouraging story. Over three years, Loyal Equipments has delivered a remarkable 122.83% return, vastly outperforming the Sensex’s 35.67%. Over five and ten years, the stock’s cumulative returns of 458.62% and 732.90% respectively dwarf the Sensex’s 74.40% and 224.57%. This long-term outperformance highlights the company’s resilience and growth potential despite short-term volatility.

Mojo Score and Rating Update

MarketsMOJO’s proprietary scoring system currently assigns Loyal Equipments a Mojo Score of 31.0, with a Mojo Grade of Sell as of 27 Jan 2026. This represents an upgrade from a previous Strong Sell rating, reflecting the improved valuation attractiveness and relative operational strength. The market capitalisation grade remains modest at 4, indicating a mid-sized company with room for growth.

The downgrade in share price and recent volatility have weighed on sentiment, but the valuation shift from fair to very attractive suggests that the stock may be entering a more favourable entry point for value-oriented investors. The improved grade signals a cautious optimism, balancing the risks of near-term price weakness against the potential for recovery supported by solid fundamentals.

Investment Implications and Outlook

The shift in valuation parameters for Loyal Equipments Ltd is a noteworthy development for investors analysing the industrial manufacturing sector. The company’s improved price-to-earnings and EV/EBITDA ratios relative to peers suggest that the stock is trading at a discount to its intrinsic value, potentially offering a margin of safety for new entrants.

Operational metrics such as ROCE of 21.39% and ROE of 16.75% reinforce the company’s ability to generate returns on invested capital, which is critical in capital-intensive industries. While the dividend yield remains modest at 0.62%, the focus appears to be on reinvestment and growth rather than income distribution.

Investors should weigh the recent price weakness and short-term underperformance against the company’s long-term track record of outperformance and improving valuation grades. The current Mojo Grade of Sell, upgraded from Strong Sell, indicates a cautious stance but leaves room for upside should market conditions improve or operational momentum accelerate.

Given the competitive landscape, with some peers classified as risky or very expensive, Loyal Equipments’ relative valuation appeal is enhanced. However, investors should remain vigilant to sectoral headwinds and monitor earnings trends closely.

Conclusion

Loyal Equipments Ltd’s transition from a fair to a very attractive valuation grade marks a pivotal moment for the stock. Despite recent price declines and a cautious market sentiment reflected in its Mojo Grade, the company’s improved multiples and strong return ratios position it favourably against peers. Long-term investors with a tolerance for volatility may find the current price levels an opportune entry point, while those seeking more immediate stability might consider alternative options within the industrial manufacturing sector.

As always, comprehensive due diligence and alignment with individual investment goals remain paramount when considering exposure to this stock.

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