Rishiroop Ltd Valuation Shifts to Fair Amidst Challenging Market Returns

Valuation Metrics and Grade Revision

As of 10 Feb 2026, Rishiroop Ltd's price-to-earnings (P/E) ratio stands at 21.36, a figure that has contributed to its valuation grade being downgraded from attractive to fair. This P/E multiple, while moderate, is lower than several peers such as GRP (34.41) and Dolfin Rubbers (38.86), but higher than Rubfila International’s notably low 12.6, which remains very attractive. The price-to-book value (P/BV) ratio of 0.61 further underscores the stock’s fair valuation status, indicating that the market values the company at just over half its book value, a sign of cautious investor sentiment.

Enterprise value to EBITDA (EV/EBITDA) ratio for Rishiroop is 14.73, which is slightly below the peer average but still reflects a premium compared to some competitors like Rubfila International (7.76). This metric suggests that while the company is not excessively expensive, it does not offer the compelling valuation discounts seen in certain peers.

Financial Performance and Returns

Rishiroop’s return on capital employed (ROCE) and return on equity (ROE) are modest at 3.45% and 2.86% respectively, indicating limited profitability and efficiency in capital utilisation. These returns lag behind industry expectations and contribute to the cautious stance reflected in the company’s strong sell Mojo Grade of 26.0, recently downgraded from sell on 5 Aug 2025.

The stock’s dividend yield of 1.61% offers some income appeal, but this is unlikely to offset concerns about growth and profitability in the eyes of investors. The PEG ratio remains at zero, signalling either a lack of earnings growth or insufficient data to calculate this metric, which further complicates valuation assessments.

Price Movement and Market Capitalisation

Rishiroop’s current market price is ₹93.00, showing a modest intraday gain of 0.62% from the previous close of ₹92.43. The stock has traded between ₹85.20 and ₹193.90 over the past 52 weeks, highlighting significant volatility and a substantial decline from its peak. This price behaviour reflects broader sector challenges and company-specific issues that have weighed on investor confidence.

The company holds a market cap grade of 4, indicating a mid-tier market capitalisation within its sector, which may limit liquidity and institutional interest compared to larger industrial peers.

Comparative Analysis with Peers

When benchmarked against its industrial products peers, Rishiroop’s valuation appears reasonable but not compelling. For instance, Tinna Rubber trades at a higher P/E of 27.54 and EV/EBITDA of 17.48, yet maintains a fair valuation grade, suggesting that investors may be pricing in stronger growth prospects or better financial health. Conversely, Indag Rubber’s P/E ratio of 48.93 and EV/EBITDA of 95.25 place it in the risky category, highlighting the wide valuation dispersion within the sector.

Rubfila International stands out with a very attractive valuation, trading at a P/E of 12.6 and EV/EBITDA of 7.76, signalling a potential value opportunity relative to Rishiroop. Meanwhile, Dolfin Rubbers, with a P/E of 38.86 and EV/EBITDA of 21.78, is classified as expensive, reflecting market optimism about its prospects despite higher multiples.

Stock Returns Versus Sensex

Rishiroop’s stock returns have underperformed the Sensex across most time horizons. Over the past year, the stock has declined by 51.08%, while the Sensex gained 7.97%. Even over three and five years, Rishiroop’s returns of -7.32% and -2.92% lag behind the Sensex’s robust 38.25% and 63.78% respectively. The only exception is the 10-year period, where Rishiroop’s 185.28% return, though impressive, still trails the Sensex’s 249.97% gain.

This underperformance highlights the challenges faced by Rishiroop in delivering shareholder value relative to broader market indices and peers, reinforcing the cautious valuation stance.

Outlook and Investment Considerations

Given the downgrade in valuation grade from attractive to fair and the strong sell Mojo Grade, investors should approach Rishiroop with caution. The company’s modest profitability metrics, subdued returns, and valuation that does not offer a significant discount relative to peers limit its appeal as a value investment at current levels.

However, the stock’s low P/BV ratio and moderate EV/EBITDA multiples suggest that it is not excessively overvalued, leaving room for potential recovery should operational improvements or sector tailwinds materialise. Investors with a higher risk tolerance may consider monitoring the company for signs of turnaround or valuation re-rating.

Conclusion

Rishiroop Ltd’s recent valuation shift from attractive to fair reflects a recalibration of investor expectations amid ongoing sector challenges and modest financial performance. While the stock is not expensive by conventional metrics, its limited profitability and underwhelming returns relative to the Sensex and peers justify the cautious market stance and strong sell rating.

Investors should weigh these factors carefully and consider alternative opportunities within the industrial products sector or broader market that offer stronger fundamentals and more compelling valuations.

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