Savera Industries Ltd Valuation Shifts to Fair Amid Mixed Market Performance

Valuation Metrics and Recent Changes

As of early February 2026, Savera Industries trades at ₹147.00, up 4.26% from the previous close of ₹141.00. The stock’s 52-week range spans ₹118.00 to ₹169.90, indicating moderate volatility within the past year. The company’s P/E ratio currently stands at 13.19, a figure that has contributed to the recent downgrade in its valuation grade from attractive to fair. This P/E is modest when compared to some peers but reflects a re-rating from prior levels.

The price-to-book value ratio is 1.87, signalling that the stock is trading at nearly twice its book value. While this is not excessive, it is higher than the levels that previously supported a more favourable valuation grade. Other valuation multiples include an EV/EBITDA of 8.89 and an EV/EBIT of 11.96, both suggesting a reasonable enterprise value relative to earnings, though these metrics have not prevented the downgrade.

Peer Comparison Highlights Valuation Divergence

Within the Hotels & Resorts sector, Savera Industries’ valuation contrasts sharply with several peers. For instance, Benares Hotels is classified as very expensive, with a P/E of 28.22 and an EV/EBITDA of 19.56, while Viceroy Hotels, despite a lower P/E of 11.87, commands a high EV/EBITDA of 28.58. Conversely, Royal Orchid Hotels and Kamat Hotels maintain attractive valuations, with P/E ratios of 20.79 and 18.35 respectively, but their EV/EBITDA multiples are significantly higher than Savera’s.

Notably, Advani Hotels is rated very attractive with a P/E of 20.91 and EV/EBITDA of 14.32, indicating that valuation attractiveness in this sector is nuanced and influenced by factors beyond simple multiples, including profitability and growth prospects.

Financial Performance and Returns Contextualise Valuation

Savera Industries’ return on capital employed (ROCE) is a robust 18.08%, while return on equity (ROE) stands at 14.15%. These figures suggest efficient capital utilisation and reasonable profitability, supporting the company’s valuation despite the downgrade. The dividend yield of 2.04% adds an income component for investors, though it is modest relative to some peers.

Examining stock returns relative to the Sensex reveals a mixed picture. Over the past week, Savera outperformed the benchmark with a 6.33% gain versus Sensex’s 0.16%. Year-to-date, the stock has risen 2.91%, while the Sensex declined 4.17%. However, over the one-year horizon, Savera’s stock fell 4.55%, underperforming the Sensex’s 5.37% gain. Longer-term returns are more favourable, with three- and five-year returns of 106.75% and 260.74% respectively, significantly outpacing the Sensex’s 36.26% and 64.00% gains. This long-term outperformance underscores the company’s growth trajectory despite recent valuation adjustments.

Mojo Score and Rating Implications

Savera Industries currently holds a Mojo Score of 45.0, which corresponds to a Mojo Grade of Sell as of 29 December 2025. This represents a downgrade from the previous Hold rating, reflecting the shift in valuation and possibly other fundamental or technical factors assessed by MarketsMOJO’s proprietary scoring system. The Market Cap Grade is 4, indicating a mid-tier market capitalisation within the sector.

The downgrade signals caution for investors, suggesting that while the stock remains reasonably valued on absolute terms, relative to its historical valuation and sector peers, it no longer offers the same degree of price attractiveness. This is particularly relevant given the sector’s mixed valuation landscape, where some peers command premium multiples justified by growth or market positioning.

Sector Valuation Environment and Risks

The Hotels & Resorts sector continues to face headwinds from fluctuating travel demand and economic uncertainties. Several companies in the sector are classified as very expensive or risky, such as HLV with a P/E of 52.73 and an EV/EBITDA of 25.00, underscoring the valuation disparities within the industry. Savera’s fair valuation grade positions it in the middle of this spectrum, balancing reasonable earnings multiples with solid profitability metrics.

Investors should also consider the company’s PEG ratio of 0.79, which suggests that earnings growth expectations are factored into the current price, potentially offering some margin of safety. However, the relatively modest dividend yield and recent rating downgrade imply that the stock may not be the most compelling choice for income-focused or risk-averse investors at present.

Investment Outlook and Considerations

While Savera Industries’ valuation has moderated, the company’s long-term performance remains impressive, with cumulative returns over five years exceeding 260%, far outstripping the Sensex’s 64% gain. This track record highlights the company’s ability to generate shareholder value over extended periods, supported by solid operational metrics such as ROCE and ROE.

However, the recent downgrade to a Sell rating and the shift from attractive to fair valuation suggest that investors should approach the stock with caution. The current multiples imply limited upside from a valuation perspective, especially when compared to more attractively valued peers within the sector. Market participants should weigh Savera’s stable fundamentals against sector risks and consider alternative opportunities that may offer better risk-adjusted returns.

In summary, Savera Industries Ltd’s valuation adjustment reflects a recalibration of market expectations amid evolving sector dynamics. While the company remains fundamentally sound, the price attractiveness has diminished relative to its historical standing and peer group, warranting a more cautious stance from investors.

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