Par Drugs & Chemicals Ltd Valuation Shifts to Fair Amid Mixed Market Performance

Valuation Metrics and Market Context

As of 10 February 2026, Par Drugs & Chemicals Ltd trades at ₹96.49, up from the previous close of ₹91.72, with a day’s high of ₹102.00 and a low of ₹91.71. The stock remains significantly below its 52-week high of ₹190.24, indicating a substantial correction over the past year. The 52-week low stands at ₹81.01, placing the current price closer to the lower end of its annual trading range.

The company’s P/E ratio currently stands at 12.02, a level that has prompted a downgrade in its valuation grade from attractive to fair. This figure is modest when compared to peers such as Sanstar Chemicals, which trades at a P/E of 82.04 and is rated very expensive, and Stallion India at 45.15. However, it is higher than some attractive peers like TGV Sraac, which has a P/E of 7.99, and Dhunseri Ventures at 13.88.

Similarly, the price-to-book value ratio of 1.18 suggests that the stock is trading slightly above its book value, a shift from previous periods when it was considered undervalued. This change signals a market reassessment of the company’s asset base and growth prospects.

Comparative Enterprise Value Multiples

Enterprise value (EV) multiples provide further insight into the company’s valuation. Par Drugs & Chemicals’ EV to EBITDA ratio is 6.59, which is relatively low compared to industry heavyweights such as Sanstar Chemicals (81.63) and Stallion India (28.87), but aligns more closely with mid-tier players like Jyoti Resins (12.43) and Gem Aromatics (12.97). The EV to EBIT ratio of 9.06 and EV to sales ratio of 0.90 reinforce the notion that the company is fairly valued within its sector.

These multiples suggest that while the stock is no longer a bargain, it remains reasonably priced relative to its earnings and sales generation capacity, especially when considering its robust return on capital employed (ROCE) of 22.22% and return on equity (ROE) of 9.79%.

Stock Performance Relative to Sensex

Par Drugs & Chemicals’ recent stock returns reveal a mixed picture. Over the past week, the stock surged 7.29%, outperforming the Sensex’s 3.10% gain. The one-month return of 2.93% also surpassed the benchmark’s 0.72%. However, year-to-date (YTD) performance shows a decline of 4.71%, slightly worse than the Sensex’s 1.00% fall.

Longer-term returns paint a more challenging scenario. The stock has declined 49.28% over the past year, in stark contrast to the Sensex’s 9.79% gain. Over three years, the stock is down 39.99%, while the Sensex has appreciated 44.56%. Despite this, the five-year return of 196.89% significantly outpaces the Sensex’s 71.20%, highlighting the company’s strong historical growth trajectory before recent setbacks.

Mojo Score and Rating Update

MarketsMOJO’s latest assessment assigns Par Drugs & Chemicals a Mojo Score of 40.0, with a Mojo Grade of Sell, upgraded from a previous Strong Sell rating on 10 May 2025. This upgrade reflects some improvement in the company’s fundamentals and valuation metrics, though caution remains warranted given the stock’s volatility and sector challenges.

The company’s market capitalisation grade remains low at 4, indicating a micro-cap status that may entail higher risk and lower liquidity compared to larger peers.

Sector and Peer Comparison

Within the Chemicals & Petrochemicals sector, Par Drugs & Chemicals is positioned in the mid-range of valuation and performance. Peers such as I G Petrochemicals and Gem Aromatics are rated attractive or very attractive, with P/E ratios of 34.31 and 18.12 respectively, but with higher EV to EBITDA multiples. Conversely, companies like Sanstar Chemicals and Stallion India are considered very expensive, with P/E ratios exceeding 40.

This relative positioning suggests that Par Drugs & Chemicals offers a more balanced risk-reward profile, trading at a fair valuation that may appeal to investors seeking exposure to the sector without paying a premium.

Investment Considerations and Outlook

Investors analysing Par Drugs & Chemicals should weigh the company’s solid operational metrics against its valuation shift and recent price volatility. The ROCE of 22.22% indicates efficient capital utilisation, while the ROE of 9.79% suggests moderate profitability relative to shareholder equity.

However, the absence of a dividend yield and a PEG ratio of zero may signal limited growth expectations or a lack of earnings growth visibility. The downgrade from an attractive to a fair valuation grade underscores the need for cautious optimism, especially given the stock’s underperformance relative to the broader market over the past year.

Market participants should also consider the company’s micro-cap status and the inherent risks associated with smaller capitalisation stocks, including liquidity constraints and higher susceptibility to sector-specific headwinds.

Historical Valuation Context

Historically, Par Drugs & Chemicals traded at more attractive valuation multiples, which supported its strong five-year return of nearly 197%. The recent correction in price and the corresponding adjustment in valuation grades reflect a market recalibration amid changing industry dynamics and broader economic conditions.

Comparing current multiples to historical averages and peer valuations can help investors identify whether the stock presents a value opportunity or if further downside risk remains. At a P/E of 12.02 and P/BV of 1.18, the stock is no longer undervalued but may still offer reasonable entry points for long-term investors with a higher risk tolerance.

Conclusion

Par Drugs & Chemicals Ltd’s transition from an attractive to a fair valuation grade highlights the evolving market sentiment and the importance of continuous fundamental analysis. While the company demonstrates strong capital efficiency and a respectable valuation relative to peers, its recent price volatility and sector challenges warrant a cautious approach.

Investors should monitor upcoming earnings reports, sector developments, and broader market trends to reassess the stock’s attractiveness. For those seeking exposure to the Chemicals & Petrochemicals sector, comparing Par Drugs & Chemicals with other top-rated alternatives may provide better risk-adjusted opportunities.

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