Valuation Metrics and Recent Grade Change
On 5 January 2026, Nitta Gelatin’s Mojo Grade was downgraded from Hold to Sell, with its Mojo Score settling at 45.0. This downgrade was primarily driven by a reclassification of its valuation grade from attractive to fair. The company’s price-to-earnings (P/E) ratio currently stands at 10.32, a level that, while reasonable, is higher than some of its more attractively valued peers in the specialty chemicals sector.
The price-to-book value (P/BV) ratio is 1.70, indicating that the stock trades at a modest premium to its book value. Other valuation multiples include an enterprise value to EBIT (EV/EBIT) of 7.15 and an EV to EBITDA of 6.18, both suggesting a moderate valuation relative to earnings before interest and taxes and earnings before interest, taxes, depreciation, and amortisation respectively.
These multiples, when compared to the company’s historical averages, reveal a tightening of valuation margins. Historically, Nitta Gelatin’s P/E ratio has oscillated around the 9 to 11 range, but the recent upward movement towards 10.32 signals a shift towards fair value territory rather than the previously attractive zone.
Comparative Analysis with Peers
Within the specialty chemicals sector, Nitta Gelatin’s valuation stands in contrast to a diverse peer group. For instance, Stallion India is classified as expensive with a P/E of 45.34 and an EV/EBITDA of 29.00, while TGV Sraac is considered very attractive with a P/E of 7.69 and EV/EBITDA of 3.74. Oriental Aromatics, despite a high P/E of 98.44, is rated attractive due to other factors such as growth prospects and market positioning.
Other peers like Dhunseri Ventures and Gem Aromatics maintain attractive valuations with P/E ratios of 13.41 and 15.34 respectively, but their EV/EBITDA multiples vary significantly, reflecting differing capital structures and profitability profiles. Indo Amines, rated very attractive, trades at a P/E of 11.64 and EV/EBITDA of 9.78, slightly higher than Nitta Gelatin but still within a reasonable range.
In contrast, companies such as Indo Borax & Chemicals and Titan Biotech are deemed very expensive, with P/E ratios exceeding 20 and EV/EBITDA multiples above 15, underscoring the relative value proposition that Nitta Gelatin currently offers within its sector.
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Financial Performance and Return Metrics
Nitta Gelatin’s return on capital employed (ROCE) is a robust 27.67%, while return on equity (ROE) stands at 16.47%, both indicative of efficient capital utilisation and solid profitability. The dividend yield remains modest at 0.95%, reflecting a conservative payout policy consistent with growth-oriented firms in the specialty chemicals space.
From a price performance perspective, the stock has outperformed the benchmark Sensex across multiple time horizons. Over the past week, Nitta Gelatin surged 8.56% compared to the Sensex’s 0.90% gain. The one-month return is 5.01% versus a Sensex decline of 2.84%, and year-to-date the stock has appreciated 3.89% while the Sensex fell 3.46%.
Longer-term returns are even more impressive, with a one-year gain of 17.14% against the Sensex’s 7.18%, a three-year return of 45.54% compared to 38.27%, and a five-year return of 372.83% dwarfing the Sensex’s 77.74%. Over a decade, Nitta Gelatin has delivered a staggering 408.51% return, significantly outperforming the Sensex’s 230.79%.
Price Movement and Trading Range
On 1 February 2026, Nitta Gelatin’s stock closed at ₹845.65, up 8.63% from the previous close of ₹778.50. The intraday high reached ₹875.00, while the low was ₹777.55, reflecting strong buying interest. The stock’s 52-week high is ₹1,005.00 and the low is ₹640.00, indicating a substantial trading range and potential upside from current levels.
The recent price appreciation, coupled with the valuation grade shift, suggests that the market is recalibrating its expectations, possibly factoring in both the company’s solid fundamentals and broader sector valuation trends.
Valuation Context and Investment Implications
The transition from an attractive to a fair valuation grade signals a more cautious stance on Nitta Gelatin’s price attractiveness. While the stock remains reasonably valued relative to many peers, the elevated PEG ratio of 10.32 raises questions about growth expectations relative to earnings expansion. This contrasts with peers like TGV Sraac, which has a PEG of 0.07, indicating undervaluation relative to growth.
Investors should weigh the company’s strong profitability and superior long-term returns against the current valuation plateau. The fair valuation grade suggests limited upside from a pure valuation perspective, especially when compared to more attractively priced specialty chemical stocks.
Given the downgrade to a Sell rating by MarketsMOJO, investors may consider trimming exposure or seeking better-valued alternatives within the sector. However, the company’s consistent operational performance and market leadership remain positive factors supporting the stock’s medium-term outlook.
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Sector Outlook and Broader Market Considerations
The specialty chemicals sector continues to attract investor interest due to its growth potential driven by industrial demand, innovation, and export opportunities. However, valuation disparities within the sector remain pronounced, with some companies trading at steep premiums while others offer value propositions.
Nitta Gelatin’s fair valuation status places it in a middle ground, where investors must balance the company’s strong fundamentals against the risk of limited valuation expansion. The company’s market capitalisation grade of 4 reflects a mid-tier size within the sector, which may influence liquidity and institutional interest.
Market participants should also consider macroeconomic factors such as raw material price volatility, regulatory changes, and global trade dynamics that could impact specialty chemical companies’ earnings and valuations.
Conclusion
Nitta Gelatin India Ltd’s recent valuation shift from attractive to fair highlights a critical juncture for investors. While the company boasts impressive returns, solid profitability, and a reasonable price relative to book value and earnings, the elevated PEG ratio and peer comparisons suggest that the stock’s price appreciation potential may be constrained in the near term.
Investors are advised to monitor the company’s operational performance closely and consider sector alternatives that offer superior valuation and growth combinations. The downgrade to a Sell rating by MarketsMOJO underscores the need for a cautious approach, especially for those seeking value-driven investments within the specialty chemicals space.
Overall, Nitta Gelatin remains a fundamentally sound company, but its current valuation reflects a fair price that may limit near-term upside, prompting a strategic reassessment by investors.
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