Modison Ltd Valuation Shifts to Attractive Amidst Mixed Market Returns

Valuation Metrics Reflect Improved Price Appeal

Modison Ltd’s current price-to-earnings (P/E) ratio stands at 12.10, a figure that positions the stock favourably against many of its industry peers. This P/E is significantly lower than companies such as Rishabh Instruments, which trades at a P/E of 24.86, and Salzer Electronics at 21.82, indicating Modison’s shares are relatively undervalued on earnings multiples. The price-to-book value (P/BV) ratio of 1.99 further supports this view, suggesting the stock is trading at just under twice its book value, a level that is attractive within the Other Electrical Equipment sector.

Enterprise value to EBITDA (EV/EBITDA) is another key metric where Modison shines, currently at 8.68. This compares favourably to peers like GPT Infraproject (11.24) and Salzer Electronics (11.09), signalling that Modison’s operational earnings are being valued more conservatively by the market. The company’s PEG ratio of 0.16 is particularly noteworthy, indicating that the stock’s price is low relative to its earnings growth potential, a metric that often appeals to growth-oriented investors seeking value.

Quality and Profitability Metrics Support Valuation

Beyond valuation multiples, Modison’s return on capital employed (ROCE) and return on equity (ROE) stand at 14.43% and 14.01% respectively. These figures demonstrate a solid level of profitability and efficient capital utilisation, which underpin the company’s attractive valuation. The dividend yield of 3.24% adds an income component to the investment case, providing a modest but stable return to shareholders amid market volatility.

However, it is important to note that despite these positive fundamentals, the company’s Mojo Score has declined to 48.0, with a corresponding downgrade in Mojo Grade from Hold to Sell as of 23 February 2026. This reflects some caution from the rating agency, possibly due to recent price weakness and broader market conditions.

Comparative Analysis with Sector Peers

When benchmarked against other companies in the Other Electrical Equipment industry, Modison’s valuation stands out as attractive but not the cheapest. For instance, Likhitha Infra is rated as very attractive with a P/E of 11.58 and an EV/EBITDA of 7.24, slightly outperforming Modison on valuation grounds. Vascon Engineers also presents an attractive valuation with a P/E of 11.46, though its EV/EBITDA is higher at 11.10.

Conversely, several peers such as Dhenu Buildcon and Reliance Industrial Infrastructure are classified as risky, with loss-making operations or extremely high valuation multiples, making Modison’s relative valuation more appealing. The presence of expensive stocks like Shree Refrigeration, trading at a P/E of 50.43, further highlights Modison’s comparative affordability.

Stock Price Performance and Market Context

Despite the improved valuation metrics, Modison’s stock price has experienced pressure recently. The share closed at ₹139.10 on 24 February 2026, down 2.04% from the previous close of ₹142.00. The stock’s 52-week high is ₹197.00, while the low is ₹108.30, indicating a wide trading range over the past year.

Short-term returns have been negative, with a 1-week decline of 5.02% and a 1-month drop of 6.68%, contrasting with the Sensex’s modest gains of 0.02% and 2.15% respectively over the same periods. Year-to-date, Modison has fallen 9.73%, underperforming the Sensex’s 2.26% decline. However, the longer-term performance tells a different story: over three years, Modison has delivered a remarkable 138.18% return, significantly outpacing the Sensex’s 39.74%. Over five and ten years, the stock has returned 212.23% and 234.38% respectively, demonstrating strong compounding growth despite recent volatility.

Implications for Investors

The shift in valuation grading from very attractive to attractive suggests that Modison Ltd’s shares are still reasonably priced but may have limited upside relative to the previous rating. The downgrade in Mojo Grade to Sell reflects caution, likely driven by recent price declines and possibly broader sector headwinds. Investors should weigh the company’s solid profitability metrics and attractive valuation against the short-term price weakness and lower momentum scores.

Given the company’s strong long-term returns and reasonable valuation multiples, value-oriented investors with a medium to long-term horizon may find Modison an interesting proposition. However, those prioritising momentum or short-term price stability might prefer to consider alternative stocks within the sector or related industries.

Conclusion

Modison Ltd’s valuation parameters indicate a stock that remains attractively priced relative to many peers, supported by solid profitability and dividend yield. The recent downgrade in rating and price softness, however, counsel prudence. Investors should carefully assess their risk tolerance and investment horizon before committing, considering the company’s mixed short-term performance but strong historical returns. The evolving valuation landscape suggests Modison is a stock to watch closely as market conditions develop.

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