SAL Automotive Ltd Valuation Shifts Signal Changing Market Sentiment

Valuation Metrics: A Closer Look

SAL Automotive’s price-to-earnings (P/E) ratio currently stands at 21.21, a figure that positions the stock as attractively valued within the auto components sector. This marks a shift from its previous very attractive valuation status, indicating a modest increase in price relative to earnings. The price-to-book value (P/BV) ratio is 2.25, which remains reasonable given the company’s asset base and sector norms.

Other key valuation multiples include an enterprise value to EBIT (EV/EBIT) of 18.52 and an EV to EBITDA of 11.27. These ratios suggest that while the stock is not undervalued, it remains competitively priced relative to earnings before interest, taxes, depreciation, and amortisation. The EV to capital employed ratio is 1.80, and EV to sales is 0.33, both indicating efficient capital utilisation and sales valuation.

The PEG ratio is reported as 0.00, which may reflect either a lack of consensus on growth estimates or a data anomaly; however, the dividend yield of 1.20% provides a modest income stream to investors. Return on capital employed (ROCE) and return on equity (ROE) stand at 10.96% and 10.61% respectively, signalling moderate profitability and capital efficiency.

Comparative Peer Analysis

When benchmarked against peers in the auto components and equipment industry, SAL Automotive’s valuation appears attractive but not the most compelling. For instance, Rico Auto Industries trades at a significantly higher P/E of 40.45 and EV/EBITDA of 11.63, yet is also rated as attractive. Kross Ltd, another peer, has a P/E of 27.26 and EV/EBITDA of 16.13, indicating a pricier valuation relative to SAL Automotive.

Conversely, companies like Auto Corporation of Goa and Jay Bharat Manufacturing are rated very attractive with P/E ratios of 15.25 and 14.88 respectively, and EV/EBITDA multiples below 13. This suggests that while SAL Automotive’s valuation has improved, there remain peers offering potentially better price points for investors seeking value.

On the other end of the spectrum, RACL Geartech is considered expensive with a P/E of 38 and EV/EBITDA of 17.35, while Sar Auto Products is categorised as risky with an extraordinarily high P/E of 14,991.5, underscoring the wide valuation disparities within the sector.

Stock Price Movement and Market Capitalisation

The stock price of SAL Automotive closed at ₹208.95 on 5 Feb 2026, up 2.70% from the previous close of ₹203.45. The intraday range saw a low of ₹195.00 and a high of ₹220.80, reflecting moderate volatility. The 52-week high and low stand at ₹346.65 and ₹185.00 respectively, indicating the stock is trading closer to its lower annual range, which may contribute to its improved valuation appeal.

The company’s market capitalisation grade is rated 4, suggesting a mid-sized market cap that balances liquidity and growth potential. This positioning is important for investors weighing the trade-off between stability and upside potential.

Returns Analysis: Performance Versus Sensex

Examining SAL Automotive’s returns relative to the Sensex reveals a mixed performance picture. Over the past week, the stock outperformed the Sensex with a 4.37% gain compared to the benchmark’s 1.79%. However, over the one-month and year-to-date periods, SAL Automotive underperformed, declining 7.71% and 7.54% respectively, while the Sensex fell by 2.27% and 1.65% over the same periods.

Longer-term returns are more favourable, with the stock delivering a 58.60% gain over three years and an impressive 148.31% over five years, substantially outperforming the Sensex’s 37.76% and 65.60% returns respectively. Over a decade, SAL Automotive’s return of 1,641.25% dwarfs the Sensex’s 244.38%, highlighting the company’s strong growth trajectory historically despite recent headwinds.

Mojo Score and Rating Update

MarketsMOJO’s latest assessment upgraded SAL Automotive’s mojo grade from Sell to Strong Sell on 4 Feb 2026, reflecting increased caution despite the improved valuation grade from very attractive to attractive. The mojo score currently stands at 14.0, signalling significant concerns regarding the stock’s near-term outlook, possibly due to sector headwinds or company-specific risks.

This downgrade suggests that while valuation metrics have become more favourable, underlying fundamentals or market conditions may not support a bullish stance at present. Investors should weigh these factors carefully when considering exposure to SAL Automotive.

Investment Implications and Outlook

The shift in SAL Automotive’s valuation from very attractive to attractive indicates a moderate re-rating of the stock’s price multiples, likely driven by recent price appreciation and evolving market sentiment. While the P/E ratio of 21.21 remains reasonable compared to the sector average, it is higher than some very attractively valued peers, suggesting limited margin for further multiple expansion.

Profitability metrics such as ROCE and ROE near 11% reflect steady but unspectacular returns on capital, which may not justify a premium valuation in a competitive auto components industry facing cyclical pressures. The dividend yield of 1.20% adds a modest income component but is unlikely to be a primary attraction for income-focused investors.

Given the mixed recent returns and the strong sell mojo rating, investors should approach SAL Automotive with caution. The stock’s long-term growth story remains intact, but near-term risks and valuation adjustments warrant a conservative stance. Comparing SAL Automotive with peers offering lower P/E ratios and stronger mojo scores may provide better risk-adjusted opportunities.

In summary, SAL Automotive’s improved valuation attractiveness is a positive development, but it is tempered by a downgraded mojo rating and recent underperformance relative to the Sensex. Investors should balance these factors carefully and consider portfolio diversification strategies to optimise returns.

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