Medico Remedies Ltd Valuation Shifts to Fair Amidst Market Pressure

Valuation Metrics: A Closer Look

As of 25 Feb 2026, Medico Remedies trades at ₹46.00, down 1.98% from the previous close of ₹46.93. The stock’s 52-week range spans ₹35.00 to ₹66.05, indicating significant volatility over the past year. The company’s price-to-earnings (P/E) ratio currently stands at 32.91, a figure that has moderated enough to prompt a downgrade in its valuation grade from expensive to fair. This shift suggests that while the stock remains priced at a premium relative to broader market averages, it is no longer perceived as overvalued to the same extent as before.

Complementing the P/E ratio, the price-to-book value (P/BV) ratio is at 5.71, which, although elevated, aligns with the pharmaceutical sector’s typical premium due to growth prospects and intellectual property assets. The enterprise value to EBITDA (EV/EBITDA) ratio of 23.71 further underscores the stock’s premium valuation, yet remains within a range that investors may find justifiable given the company’s operational metrics.

Comparative Peer Analysis

When benchmarked against peers within the Pharmaceuticals & Biotechnology sector, Medico Remedies’ valuation appears balanced. For instance, Bliss GVS Pharma trades at a P/E of 20.46 and EV/EBITDA of 15.03, both lower than Medico Remedies, but Bliss is also rated as fair value. Conversely, Shukra Pharma and NGL Fine Chem are classified as very expensive, with P/E ratios of 56.16 and 39.54 respectively, and EV/EBITDA multiples exceeding 25. This positions Medico Remedies in a middle ground, neither the cheapest nor the most expensive, which may appeal to investors seeking moderate risk exposure within the sector.

Other notable peers include Kwality Pharma, rated expensive with a P/E of 24.33, and TTK Healthcare, considered attractive at a P/E of 18.45 despite a relatively high EV/EBITDA of 26.47. This diversity in valuation grades across the sector highlights the nuanced investor sentiment and varying growth expectations.

Financial Performance and Quality Metrics

Medico Remedies’ return on capital employed (ROCE) stands at a robust 15.85%, while return on equity (ROE) is 17.35%, both indicative of efficient capital utilisation and profitability. These figures support the company’s fair valuation status, as they reflect solid operational performance relative to its valuation multiples.

However, the PEG ratio of 1.06 suggests that the stock’s price is closely aligned with its earnings growth rate, implying limited margin for valuation expansion unless earnings accelerate materially. Dividend yield data is not available, which may be a consideration for income-focused investors.

Stock Performance Versus Market Benchmarks

Examining recent returns, Medico Remedies has underperformed the Sensex across multiple timeframes. Over the past week, the stock declined 3.83% compared to the Sensex’s 1.47% drop. The one-month return shows a sharper contrast, with Medico Remedies down 14.07% while the Sensex gained 0.84%. Year-to-date, the stock is down 9.02% versus the Sensex’s 3.51% decline.

Longer-term performance also reveals challenges; the one-year return is negative 29.45% against a positive 10.44% for the Sensex, and over three years, the stock has fallen 30.78% while the benchmark surged 38.28%. Despite this, the five-year return remains impressive at 782.49%, significantly outperforming the Sensex’s 61.92%, reflecting strong historical growth that may still underpin investor confidence.

Mojo Score and Rating Update

MarketsMOJO assigns Medico Remedies a Mojo Score of 52.0, reflecting a Hold rating, downgraded from Buy as of 30 Dec 2025. This adjustment aligns with the valuation grade shift and recent price performance, signalling a more cautious stance from analysts. The market capitalisation grade is 4, indicating a mid-sized company with moderate liquidity and investor interest.

Valuation Outlook and Investment Considerations

The transition from an expensive to a fair valuation grade suggests that Medico Remedies’ stock price has become more attractive relative to its earnings and book value. Investors may interpret this as an opportunity to enter or add to positions at a more reasonable price point, especially given the company’s solid ROCE and ROE metrics.

However, the stock’s recent underperformance relative to the Sensex and peers warrants caution. The pharmaceutical sector remains competitive, and Medico Remedies faces challenges in sustaining growth momentum amid pricing pressures and regulatory scrutiny. The PEG ratio near unity indicates limited upside from valuation rerating alone, emphasising the need for earnings growth to drive future returns.

Comparative analysis with peers reveals that while Medico Remedies is not the cheapest option, it offers a balanced risk-reward profile. Investors seeking exposure to the Pharmaceuticals & Biotechnology sector might consider it alongside more attractively valued names like TTK Healthcare or Bliss GVS Pharma, depending on their risk tolerance and growth expectations.

Conclusion: Balancing Valuation and Growth Prospects

Medico Remedies Ltd’s recent valuation adjustment to a fair grade reflects a recalibration of market expectations amid a volatile sector environment. While the stock’s premium multiples remain above some peers, its solid profitability metrics and historical growth record provide a foundation for cautious optimism.

Investors should weigh the stock’s current price attractiveness against its recent underperformance and sector dynamics. The Hold rating from MarketsMOJO underscores the need for selective exposure, with a focus on monitoring earnings trends and competitive positioning. For those seeking pharmaceutical sector exposure, Medico Remedies offers a balanced proposition, though alternative stocks with more compelling valuations or growth profiles may warrant consideration.

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