Salona Cotspin Ltd: Valuation Shift Enhances Price Attractiveness Amid Mixed Returns

Valuation Metrics: A Closer Look

At the core of Salona Cotspin’s valuation upgrade is its current P/E ratio of 108.17, which, while still elevated, represents a more attractive level relative to its previous standing and the broader peer group. The company’s P/BV ratio stands at 1.60, indicating a moderate premium over book value that aligns with its growth prospects and sector positioning. These figures contrast sharply with several peers in the garments and apparels industry, many of which are classified as very expensive based on their valuation multiples.

For instance, R&B Denims trades at a P/E of 44.18 but commands a significantly higher EV to EBIT multiple of 32.85, while Sumeet Industries and SBC Exports exhibit P/E ratios of 75.78 and 61.20 respectively, both accompanied by elevated EV to EBITDA multiples above 36. This comparison highlights Salona Cotspin’s relatively more reasonable valuation despite its high P/E, supported by lower enterprise value multiples such as EV to EBITDA at 10.95 and EV to EBIT at 14.86.

Sector Context and Peer Comparison

Within the garments and apparels sector, valuation disparities are pronounced. Salona Cotspin’s attractive valuation grade contrasts with the very expensive ratings assigned to several competitors, including Pashupati Cotspin (P/E 90.73) and SBC Exports. Meanwhile, companies like Sportking India and Mafatlal Industries maintain attractive valuations with P/E ratios of 11.05 and 10.88 respectively, but these firms differ in scale and market dynamics.

Notably, Indo Rama Synthetic stands out as very attractive with a P/E of 7.8 and EV to EBITDA of 7.43, underscoring the diversity of valuation levels within the sector. Salona Cotspin’s position in this spectrum suggests a middle ground, offering investors a blend of growth potential and valuation discipline.

Financial Performance and Returns Analysis

Salona Cotspin’s financial metrics provide further context to its valuation. The company’s return on capital employed (ROCE) is 7.81%, while return on equity (ROE) is modest at 1.48%. Dividend yield remains low at 0.39%, reflecting a focus on reinvestment and growth rather than income distribution. These figures indicate a company in a growth phase, with returns yet to fully mature but supported by operational efficiency.

Examining stock performance, Salona Cotspin has delivered a robust 12.12% return over the past week, significantly outperforming the Sensex’s 2.30% gain. Over the one-month horizon, the stock has marginally increased by 0.39%, while the Sensex declined by 2.36%. Year-to-date, the stock has remained flat, contrasting with the Sensex’s 1.74% decline. However, longer-term returns reveal a mixed picture: a negative 8.48% over one year versus an 8.49% gain for the Sensex, but impressive gains of 273.20% and 600.00% over five and ten years respectively, far outpacing the benchmark’s 66.63% and 245.70% returns.

Mojo Score and Rating Upgrade

MarketsMOJO’s proprietary scoring system has recently upgraded Salona Cotspin’s mojo grade from Sell to Hold as of 01 Feb 2026, reflecting the improved valuation and underlying fundamentals. The current mojo score stands at 61.0, signalling a moderate investment appeal. The market capitalisation grade is 4, indicating a mid-tier market cap classification within the small cap universe.

This upgrade is significant as it marks a shift in investor sentiment, recognising the company’s enhanced price attractiveness despite the still elevated P/E ratio. The valuation grade change from very attractive to attractive suggests that while the stock remains a premium growth play, it is now perceived as more fairly priced relative to its earnings and book value.

Price Movement and Trading Range

On 04 Feb 2026, Salona Cotspin closed at ₹259.00, up 2.11% from the previous close of ₹246.00. The stock traded within a range of ₹241.30 to ₹259.00 during the day, approaching its 52-week high of ₹335.00, while comfortably above its 52-week low of ₹212.95. This price action reflects renewed investor interest and confidence in the company’s valuation and growth prospects.

Valuation Multiples in Context

While the P/E ratio of 108.17 remains high compared to traditional benchmarks, it must be interpreted in the context of Salona Cotspin’s growth trajectory and sector dynamics. The EV to EBITDA multiple of 10.95 and EV to EBIT of 14.86 are more moderate, suggesting that enterprise value metrics provide a more balanced view of the company’s valuation relative to earnings before interest, taxes, depreciation and amortisation.

The PEG ratio is reported as zero, which may indicate either a lack of meaningful earnings growth projection or data unavailability; investors should consider this alongside other metrics. The company’s EV to capital employed ratio of 1.16 and EV to sales of 0.58 further support the notion that Salona Cotspin is trading at reasonable levels relative to its asset base and revenue generation.

Investment Implications and Outlook

Salona Cotspin’s valuation upgrade and improved mojo rating suggest a stock that is becoming more attractive to investors seeking exposure to the garments and apparels sector. The company’s strong long-term returns, with a 600.00% gain over ten years compared to the Sensex’s 245.70%, underscore its potential as a wealth creator despite recent volatility and short-term underperformance.

However, investors should remain cautious given the elevated P/E ratio and modest returns on equity. The company’s growth prospects must be weighed against sector headwinds and competitive pressures. The relatively low dividend yield also indicates limited income generation, favouring investors with a growth-oriented investment horizon.

Comparative valuation analysis reveals that while Salona Cotspin is no longer the cheapest option in the sector, it offers a balanced risk-reward profile relative to very expensive peers. This makes it a viable candidate for inclusion in diversified portfolios targeting the garments and apparels industry, particularly for those who prioritise consistent growth and price strength.

Conclusion

In summary, Salona Cotspin Ltd’s shift in valuation parameters from very attractive to attractive marks a meaningful development in its market perception. The company’s P/E and P/BV ratios, when analysed alongside enterprise value multiples and peer comparisons, indicate a more balanced price attractiveness that aligns with its fundamental performance and sector positioning. The mojo upgrade to Hold further validates this improved outlook, making Salona Cotspin a noteworthy consideration for investors seeking exposure to the garments and apparels sector with a focus on long-term growth and valuation discipline.

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