Valuation Metrics and Recent Grade Change
Prime Securities currently trades at a P/E ratio of 33.84 and a P/BV of 4.00, reflecting a significant premium compared to the broader NBFC sector. This valuation adjustment from expensive to fair was accompanied by a downgrade in the Mojo Grade from Hold to Sell, signalling increased caution among analysts. The company’s enterprise value to EBITDA (EV/EBITDA) stands at 25.75, which is considerably higher than many of its peers, indicating that the market continues to price in strong growth expectations despite recent price declines.
On 24 February 2026, the stock closed at ₹271.00, down 2.87% from the previous close of ₹279.00. The 52-week trading range remains wide, with a high of ₹325.00 and a low of ₹202.00, underscoring volatility in investor sentiment.
Comparative Valuation: Prime Securities vs Peers
When benchmarked against other NBFCs, Prime Securities’ valuation appears less attractive. For instance, Satin Creditcare and SMC Global Securities are classified as attractive investments, trading at P/E ratios of 8.86 and 19.85 respectively, and EV/EBITDA multiples well below 7. In contrast, Prime Securities’ P/E is nearly four times that of Satin Creditcare and significantly above the sector median.
Conversely, some peers such as Mufin Green and Ashika Credit are deemed very expensive, with P/E ratios exceeding 100 and 170 respectively, suggesting that Prime Securities’ valuation, while high, is more moderate within the upper spectrum of the sector.
Financial Performance and Returns
Prime Securities boasts a robust return on capital employed (ROCE) of 74.09% and a return on equity (ROE) of 14.48%, reflecting efficient capital utilisation and reasonable profitability. However, its dividend yield remains modest at 0.55%, which may limit appeal for income-focused investors.
In terms of stock performance, Prime Securities has outperformed the Sensex over multiple time horizons. The stock delivered a 1-year return of 18.57% compared to the Sensex’s 10.60%, and an impressive 5-year return of 569.96% against the Sensex’s 67.42%. Over a decade, the stock’s return of 6848.72% dwarfs the benchmark’s 255.80%, highlighting its long-term growth credentials despite recent valuation pressures.
This week's disclosed pick, a Large Cap from NBFC, comes with precise Target Price and analysis. Check if you're positioned right for this opportunity!
- - Precise target price set
- - Weekly selection live
- - Position check opportunity
Market Sentiment and Risk Considerations
The downgrade to a Sell grade reflects growing concerns about the stock’s price momentum and valuation sustainability. The day’s decline of 2.87% and a one-week return of -6.60% contrast sharply with the Sensex’s flat 0.02% over the same period, indicating relative weakness. Investors should weigh the premium valuation against the company’s fundamentals and sector dynamics.
Prime Securities’ PEG ratio is reported as zero, which may indicate either a lack of meaningful earnings growth projections or data unavailability, adding an element of uncertainty to growth expectations. Additionally, the company’s EV to capital employed ratio of 16.50 and EV to sales of 6.06 suggest that the market is pricing in continued operational efficiency but at a cost that may not be justified if growth slows.
Peer Comparison Highlights Investment Challenges
Several NBFC peers present more compelling valuation opportunities. Satin Creditcare and SMC Global Securities, for example, offer attractive valuations with P/E ratios below 20 and EV/EBITDA multiples under 7, coupled with stable financial metrics. Meanwhile, companies like LKP Finance and Avishkar Infra are classified as risky due to loss-making operations, underscoring the varied risk profiles within the sector.
Prime Securities’ market capitalisation grade of 4 indicates a mid-tier size within the NBFC universe, which may limit liquidity and institutional interest compared to larger peers. This factor, combined with the recent downgrade, suggests investors should carefully consider portfolio allocation and risk tolerance.
Holding Prime Securities Ltd from Non Banking Financial Company (NBFC)? See if there's a smarter choice! SwitchER compares it with peers and suggests superior options across market caps and sectors!
- - Peer comparison ready
- - Superior options identified
- - Cross market-cap analysis
Outlook and Investor Takeaways
Prime Securities Ltd’s transition to a fair valuation grade reflects a recalibration of market expectations amid a challenging NBFC landscape. While the company’s historical returns have been exceptional, current valuation multiples remain elevated relative to many peers, which may constrain upside potential in the near term.
Investors should monitor the company’s earnings trajectory, capital efficiency, and sector developments closely. The modest dividend yield and premium valuation suggest that the stock is better suited for growth-oriented investors with a higher risk appetite rather than those seeking stable income or value plays.
Given the downgrade to a Sell grade and the availability of more attractively valued peers, a cautious stance is advisable. Portfolio diversification within the NBFC sector, favouring companies with stronger valuation support and consistent profitability, may offer better risk-adjusted returns.
Summary of Key Financial Metrics for Prime Securities Ltd
- P/E Ratio: 33.84 (Fair valuation grade)
- Price to Book Value: 4.00
- EV to EBITDA: 25.75
- ROCE (Latest): 74.09%
- ROE (Latest): 14.48%
- Dividend Yield: 0.55%
- Mojo Score: 45.0 (Sell)
- Market Cap Grade: 4
In conclusion, while Prime Securities Ltd remains a significant player in the NBFC sector with strong historical returns and solid capital efficiency, its current valuation and recent downgrade suggest investors should approach with caution and consider alternative opportunities within the sector.
Only Rs. 9,999 - Get MojoOne for 1 Year + 3 Months FREE (60% Off) Start Today
