Ramco Industries Ltd Valuation Shifts Signal Renewed Price Attractiveness

Valuation Metrics Reflect Enhanced Price Attractiveness

As of 2 January 2026, Ramco Industries trades at ₹315.75, up 1.71% from the previous close of ₹310.45. The stock’s 52-week range spans from ₹216.70 to ₹398.05, indicating a recovery from its lows but still below its peak levels. The company’s P/E ratio currently stands at 11.87, a significant improvement compared to its historical averages and peer group, signalling undervaluation relative to earnings.

Moreover, the price-to-book value ratio has declined to 0.63, well below the benchmark of 1.0, suggesting the stock is trading at a discount to its net asset value. This is a key factor in the recent upgrade of Ramco Industries’ valuation grade from fair to attractive by MarketsMOJO, reflecting a more favourable entry point for investors.

Other valuation multiples such as EV to EBIT (17.12) and EV to EBITDA (14.00) remain within reasonable bounds, indicating that the enterprise value is not excessively high relative to earnings before interest, taxes, depreciation and amortisation. The PEG ratio, an indicator of growth-adjusted valuation, is exceptionally low at 0.14, underscoring the stock’s undervaluation when factoring in expected earnings growth.

Comparative Analysis with Peers Highlights Relative Value

When benchmarked against peers in the miscellaneous sector, Ramco Industries emerges as an attractive proposition. For instance, Euro Pratik Sale is classified as very expensive with a P/E of 41.97 and EV/EBITDA of 31.75, while Indian Hume Pipe, another attractive stock, trades at a higher P/E of 20.32 but a lower EV/EBITDA of 10.94. Ramco’s valuation metrics position it favourably between these peers, offering a balance of reasonable price and earnings potential.

Conversely, companies like Rhetan TMT Ltd and Shankara Building Materials exhibit extreme valuation disparities, with Rhetan TMT Ltd’s P/E soaring to 357.14 and Shankara Building Materials being very attractive at a P/E of 6.21. This wide range within the sector highlights the importance of discerning valuation nuances, where Ramco’s metrics suggest a solid middle ground with less risk of overvaluation.

Financial Performance and Returns Contextualise Valuation

Ramco Industries’ return metrics over various periods provide further context to its valuation. The stock has delivered a 12.93% return over the past year, outperforming the Sensex’s 8.51% gain. Over three years, the stock’s return of 97.34% significantly exceeds the Sensex’s 40.02%, demonstrating strong medium-term performance. However, over five and ten years, Ramco’s returns of 38.18% and 138.30% respectively lag behind the Sensex’s 77.96% and 225.63%, indicating some long-term underperformance relative to the broader market.

These figures suggest that while Ramco Industries has shown robust recent growth, there remains scope for the stock to catch up with broader market gains, especially given its improved valuation metrics. The company’s return on capital employed (ROCE) and return on equity (ROE) stand at 3.72% and 5.31% respectively, which are modest but stable, reflecting steady operational efficiency.

Dividend yield remains low at 0.32%, indicating limited income return but potential for capital appreciation given the valuation shift. The enterprise value to capital employed ratio of 0.64 and EV to sales of 1.70 further reinforce the stock’s reasonable valuation relative to its asset base and revenue generation.

MarketsMOJO Rating and Recent Grade Change

MarketsMOJO has recently downgraded Ramco Industries’ mojo grade from Buy to Hold as of 8 September 2025, reflecting a more cautious stance amid evolving market conditions. The current mojo score stands at 64.0, signalling a moderate investment appeal. The market capitalisation grade is 3, indicating a mid-sized company within its sector.

Despite the downgrade, the shift in valuation grade from fair to attractive suggests that the stock’s price has become more appealing relative to its earnings and book value, potentially offsetting some concerns that led to the rating adjustment. Investors should weigh these factors carefully, considering both the valuation improvement and the broader market context.

Investment Outlook: Balancing Valuation and Growth Prospects

Ramco Industries’ improved valuation metrics present a compelling case for investors seeking value in the miscellaneous sector. The attractive P/E and P/BV ratios, combined with a low PEG ratio, indicate that the stock is undervalued relative to its earnings growth potential. This is particularly relevant given the company’s recent outperformance against the Sensex over the past year and three years.

However, the modest returns on capital and equity, alongside a low dividend yield, suggest that investors should temper expectations for immediate income or high profitability. The downgrade in mojo grade to Hold reflects some caution warranted by the market, possibly due to sectoral headwinds or company-specific risks.

Investors should also consider the broader market environment and peer valuations. While Ramco Industries is attractively priced compared to very expensive peers like Euro Pratik Sale and Rhetan TMT Ltd, it faces competition from very attractive stocks such as Shankara Building Materials, which trades at an even lower P/E and EV/EBITDA.

In summary, Ramco Industries offers a balanced investment proposition with a favourable valuation entry point, supported by solid recent returns and reasonable financial metrics. The stock’s current price attractiveness may appeal to value-oriented investors willing to hold through moderate growth and profitability phases.

Only Rs. 9,999 - Get MojoOne + Stock of the Week for 1 Year (MRP = Rs. 34,999) Start Today