Valuation Metrics and Recent Changes
As of 31 Dec 2025, Paradeep Phosphates trades at a price of ₹165.20, up 2.29% from the previous close of ₹161.50. The stock’s 52-week range spans from ₹83.35 to ₹234.05, indicating significant volatility over the past year. The company’s price-to-earnings (P/E) ratio currently stands at 17.54, while the price-to-book value (P/BV) ratio is 2.66. These figures have contributed to the downgrade of the valuation grade from attractive to fair on 29 Dec 2025.
The enterprise value to EBITDA (EV/EBITDA) ratio is 11.17, and the EV to EBIT ratio is 13.27, both reflecting moderate valuation levels compared to historical norms. The PEG ratio, a measure of valuation relative to earnings growth, remains low at 0.18, suggesting that the stock is still reasonably priced in relation to its growth prospects. However, the shift in valuation grade signals a more cautious stance from analysts.
Comparative Analysis with Industry Peers
When benchmarked against key fertiliser sector peers, Paradeep Phosphates’ valuation appears less compelling. For instance, Chambal Fertilisers trades at a P/E of 10.17 and EV/EBITDA of 7.13, both lower than Paradeep’s ratios, yet it is also rated as fair. Deepak Fertilisers, rated attractive, has a P/E of 15.65 and EV/EBITDA of 9.78, indicating a more favourable valuation relative to earnings and cash flow.
Other peers such as RCF and GSFC also maintain attractive or fair valuations with P/E ratios of 25.94 and 10.77 respectively, and EV/EBITDA ratios of 13.23 and 8.27. Notably, GNFC and SPIC are rated very attractive with P/E ratios of 11.21 and 8.95, and EV/EBITDA ratios of 9.12 and 6.08 respectively, highlighting that Paradeep’s current valuation is less enticing in comparison.
National Fertilizer, despite a high P/E of 42.38, is rated fair, reflecting market expectations of growth or other qualitative factors. Mangalore Chemicals is considered risky with a P/E of 22.64 and a PEG ratio of 2.82, underscoring the importance of considering multiple valuation metrics alongside qualitative assessments.
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Financial Performance and Return Analysis
Paradeep Phosphates has delivered robust returns over multiple time horizons, significantly outperforming the Sensex benchmark. Year-to-date (YTD) returns stand at 48.9%, compared to the Sensex’s 8.36%. Over the past year, the stock has appreciated by 50.87%, while the Sensex gained 8.21%. The three-year return is particularly impressive at 180.48%, dwarfing the Sensex’s 39.17% over the same period.
This strong performance has likely contributed to the re-rating of the stock’s valuation, as investors have bid up the price in anticipation of sustained growth. However, the current P/E of 17.54 is above the average for many peers, suggesting that some premium is already priced in.
Return on Capital and Equity Metrics
Paradeep Phosphates’ return on capital employed (ROCE) and return on equity (ROE) are healthy at 15.05% and 15.18% respectively. These figures indicate efficient utilisation of capital and shareholder funds, supporting the company’s growth narrative. The dividend yield remains modest at 0.48%, reflecting a focus on reinvestment rather than income distribution.
Valuation Grade and Market Capitalisation
The company’s Mojo Score currently stands at 61.0, with a Mojo Grade of Hold, downgraded from Buy on 29 Dec 2025. The market capitalisation grade is 3, signalling a mid-tier market cap status within the fertiliser sector. This downgrade reflects the shift in valuation parameters and a more cautious outlook from analysts, despite the company’s solid fundamentals and market performance.
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Implications for Investors
The transition from an attractive to a fair valuation grade suggests that Paradeep Phosphates’ stock price has adjusted to reflect its recent strong performance and sector dynamics. While the company’s fundamentals remain solid, the elevated P/E and P/BV ratios relative to some peers indicate that the stock may no longer offer the same margin of safety it once did.
Investors should weigh the company’s growth prospects, return metrics, and sector outlook against the current valuation. The low PEG ratio of 0.18 still points to reasonable valuation relative to earnings growth, but the premium compared to peers warrants caution. Those holding the stock may consider the Hold rating appropriate, while prospective investors might seek better-valued alternatives within the fertiliser sector or related industries.
Historical Context and Market Sentiment
Over the past decade, the fertiliser sector has experienced significant volatility driven by commodity price fluctuations, regulatory changes, and demand cycles. Paradeep Phosphates’ stock has outperformed the broader market substantially over three years, reflecting strong operational execution and favourable market conditions.
However, the recent valuation shift signals a market recalibration, possibly anticipating a moderation in growth or increased competition. The stock’s 52-week high of ₹234.05 contrasts sharply with the current price of ₹165.20, indicating a correction from peak levels. This correction may represent a more sustainable valuation level aligned with medium-term fundamentals.
Conclusion
Paradeep Phosphates Ltd’s valuation parameters have evolved from attractive to fair, reflecting a combination of strong stock price appreciation and relative positioning against peers. While the company maintains robust financial metrics and growth potential, the current valuation suggests a more cautious investment stance. Investors should carefully analyse the stock’s price attractiveness in the context of sector dynamics, peer comparisons, and their own risk appetite.
Given the Hold rating and the shift in valuation grade, a balanced approach is advisable. Monitoring upcoming quarterly results, industry developments, and broader market trends will be crucial for making informed decisions regarding Paradeep Phosphates’ stock.
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