Mafatlal Industries Ltd Valuation Shifts to Very Attractive Amidst Market Pressure

Valuation Metrics Signal Improved Price Attractiveness

As of 24 Feb 2026, Mafatlal Industries trades at a P/E ratio of 9.85, a significant discount compared to many of its peers in the garments and apparels industry. This valuation is notably lower than companies such as R&B Denims and SBC Exports, which command P/E ratios of 56.64 and 51.50 respectively, categorised as 'very expensive'. The company’s price-to-book value stands at 1.18, reinforcing the view that the stock is undervalued relative to its net asset base.

Enterprise value multiples also reflect this trend. The EV to EBITDA ratio is 8.35, which is considerably more attractive than the likes of Pashupati Cotsp. at 60.52 and Sumeet Industrie at 25.79. These metrics collectively underpin the recent upgrade in Mafatlal’s valuation grade from 'attractive' to 'very attractive' by MarketsMOJO, signalling a positive shift in market perception.

Financial Performance and Returns Contextualise Valuation

While valuation multiples have improved, it is essential to consider the company’s underlying financial performance. Mafatlal Industries reports a return on capital employed (ROCE) of 12.26% and a return on equity (ROE) of 14.37%, indicating efficient utilisation of capital and shareholder funds. The dividend yield of 1.70% adds a modest income component for investors.

However, the stock’s recent price performance has lagged broader market indices. Year-to-date, Mafatlal has declined by 14.63%, compared to a 2.26% fall in the Sensex. Over the past year, the stock is down 4.34%, whereas the Sensex has gained 10.60%. Despite this short-term underperformance, the company’s long-term returns remain impressive, with a five-year cumulative return of 604.02% vastly outperforming the Sensex’s 67.42% over the same period.

Comparative Valuation: Mafatlal vs Peers

When benchmarked against its industry peers, Mafatlal Industries stands out for its conservative valuation. For instance, Himatsingka Seide, another 'very attractive' stock in the sector, trades at a P/E of 7.98 and EV to EBITDA of 8.75, slightly lower than Mafatlal’s multiples but within a comparable range. Conversely, companies like One Global Services and Faze Three are rated 'very expensive' or 'fair' with P/E ratios of 22.41 and 39.87 respectively, highlighting the relative bargain that Mafatlal currently offers.

The PEG ratio for Mafatlal is reported at 0.00, which may indicate either a lack of earnings growth estimates or a very low growth expectation priced in by the market. This contrasts with peers such as R&B Denims (PEG 3.49) and Pashupati Cotsp. (PEG 1.65), where higher growth expectations justify elevated valuations. Investors should weigh these growth prospects carefully when considering the stock’s valuation appeal.

Market Capitalisation and Grade Changes

Mafatlal Industries holds a market capitalisation grade of 4, reflecting its micro-cap status within the garments and apparels sector. The company’s overall Mojo Score currently stands at 31.0, with a Mojo Grade downgraded from 'Hold' to 'Sell' as of 05 Jan 2026. This downgrade reflects concerns over near-term performance and sector headwinds, despite the improved valuation metrics.

The stock’s day change on 24 Feb 2026 was a modest decline of 0.72%, closing at ₹131.30, slightly below the previous close of ₹132.25. The 52-week trading range remains wide, with a high of ₹204.90 and a low of ₹111.50, underscoring volatility and investor uncertainty.

Sectoral and Market Context

The garments and apparels sector has faced multiple challenges recently, including rising input costs, supply chain disruptions, and fluctuating consumer demand. These factors have pressured margins and earnings growth, contributing to the cautious stance reflected in Mafatlal’s Mojo Grade downgrade. However, the company’s valuation now appears to price in much of this uncertainty, potentially offering a margin of safety for value-oriented investors.

Long-term investors may find the stock’s historical outperformance compelling. Over a 10-year horizon, Mafatlal has delivered a cumulative return of 210.26%, compared to the Sensex’s 255.80%. While this underperformance over the last decade is notable, the stock’s five-year return of 604.02% significantly outpaces the Sensex’s 67.42%, indicating periods of strong growth and recovery.

Investment Considerations and Outlook

Investors analysing Mafatlal Industries should balance the improved valuation attractiveness against the company’s downgraded Mojo Grade and sector headwinds. The low P/E and P/BV ratios suggest the stock is undervalued relative to its peers and historical norms, but the lack of growth reflected in the PEG ratio and recent price underperformance warrant caution.

Quality metrics such as ROCE and ROE remain healthy, supporting the company’s operational efficiency. Dividend yield, while modest at 1.70%, adds some income appeal. The stock’s micro-cap status and market cap grade of 4 imply higher volatility and risk, which may not suit all investors.

Overall, Mafatlal Industries presents a nuanced investment case: a very attractive valuation amid a challenging sector backdrop and a cautious rating outlook. Investors with a higher risk tolerance and a value investing approach may find this an opportune entry point, while others might prefer to monitor for signs of earnings recovery and rating upgrades.

Summary

Mafatlal Industries Ltd’s valuation parameters have shifted favourably, with P/E and P/BV ratios now categorised as very attractive compared to peers and historical levels. Despite a recent downgrade in its Mojo Grade to 'Sell', the company’s solid returns on capital and equity, combined with a reasonable dividend yield, provide a foundation for potential recovery. The stock’s underperformance relative to the Sensex in the short term contrasts with its impressive long-term returns, highlighting the importance of investment horizon in decision-making. Caution remains warranted given sector challenges and growth uncertainties, but the valuation reset offers a compelling case for value-focused investors to reassess the stock’s prospects.

Only Rs. 9,999 - Get MojoOne for 1 Year + 3 Months FREE (60% Off) Start Today