Savita Oil Technologies Ltd: Valuation Shifts Signal Changing Price Attractiveness

Valuation Metrics and Market Context

As of 1 Feb 2026, Savita Oil Technologies trades at ₹349.50, marginally up 0.37% from the previous close of ₹348.20. The stock’s 52-week range spans ₹295.00 to ₹495.00, indicating significant volatility over the past year. Despite this, the company’s valuation grade has shifted from attractive to fair, signalling a moderation in price appeal.

The current P/E ratio stands at 17.33, a figure that has increased relative to prior periods, reflecting a higher price relative to earnings. This contrasts with some peers in the oil sector, such as Gulf Oil Lubricants, which maintains a very attractive P/E of 14.47, and Veedol Corporation at 12.83. Castrol India, meanwhile, is deemed expensive with a P/E of 18.64, slightly above Savita’s level.

Price-to-book value for Savita is 1.39, which is moderate and suggests the market values the company’s net assets fairly. This P/BV ratio is consistent with a fair valuation grade but less compelling than more attractively priced peers.

Comparative Enterprise Value Multiples

Enterprise value to EBITDA (EV/EBITDA) is a key metric for assessing operational profitability relative to enterprise value. Savita’s EV/EBITDA ratio is 12.26, slightly below Castrol India’s 12.85 but above Gulf Oil Lubricants’ 9.60 and Panama Petrochem’s 6.66, which are considered more attractively valued. This suggests that while Savita is not overvalued, it does not offer the same margin of safety as some competitors.

Other valuation multiples such as EV to EBIT (14.21) and EV to Capital Employed (1.43) further reinforce the company’s fair valuation status. These ratios indicate that investors are paying a reasonable premium for Savita’s earnings and capital base, but the upside potential may be limited compared to lower-valued peers.

Financial Performance and Returns

Return on capital employed (ROCE) and return on equity (ROE) are important indicators of operational efficiency and shareholder returns. Savita’s latest ROCE is 10.05%, while ROE stands at 7.99%. These figures are modest and suggest the company generates reasonable returns on invested capital, though not at levels that would justify a premium valuation.

Dividend yield is 1.14%, reflecting a modest income component for investors. This yield is consistent with the company’s current valuation and earnings profile.

Stock Performance Relative to Sensex

Examining Savita’s stock returns relative to the broader Sensex index reveals mixed performance. Over the past week, the stock declined marginally by 0.06%, while Sensex gained 0.90%. Over one month and year-to-date periods, Savita underperformed significantly, with losses of 8.65% and 8.77% respectively, compared to Sensex declines of 2.84% and 3.46%. The one-year return disparity is more pronounced, with Savita down 25.92% versus Sensex’s 7.18% gain.

However, over longer horizons, Savita has outperformed the benchmark. Over five years, the stock returned 155.45%, nearly double Sensex’s 77.74%, and over ten years, it delivered 240.64% compared to Sensex’s 230.79%. This long-term outperformance highlights the company’s growth potential despite recent valuation moderation.

Mojo Score and Rating Update

MarketsMOJO assigns Savita Oil Technologies a Mojo Score of 40.0, reflecting a cautious stance on the stock. The Mojo Grade has been downgraded from Strong Sell to Sell as of 14 May 2025, signalling a slight improvement in outlook but still indicating limited conviction for upside. The market capitalisation grade is 3, suggesting a mid-tier size classification within the oil sector.

This downgrade aligns with the shift in valuation from attractive to fair, as the stock’s price multiples have moved closer to peer averages, reducing the margin of safety for investors.

Peer Comparison and Relative Valuation

Within the oil sector, Savita’s valuation stands in the middle of the pack. Gulf Oil Lubricants and Veedol Corporation are rated very attractive with lower P/E and EV/EBITDA multiples, indicating better price points relative to earnings and cash flow. Panama Petrochem is also considered attractive with a P/E of 9.43 and EV/EBITDA of 6.66, substantially below Savita’s levels.

Conversely, Castrol India is expensive, trading at a P/E of 18.64 and EV/EBITDA of 12.85, slightly higher than Savita. GOCL Corporation is classified as risky, with a very low P/E of 4.74 but negative EV/EBIT, reflecting operational challenges.

These comparisons highlight that while Savita is not the cheapest option, it offers a balanced valuation profile relative to peers, with moderate risk and return characteristics.

Implications for Investors

The shift in valuation grade from attractive to fair suggests that Savita Oil Technologies’ stock price has adjusted upwards relative to earnings and book value, reducing its appeal as a value investment. Investors should weigh this against the company’s solid long-term returns and reasonable profitability metrics.

Given the current P/E of 17.33 and P/BV of 1.39, the stock is fairly priced in the context of its sector and historical performance. The modest dividend yield and stable ROCE and ROE figures provide some support for the valuation, but the recent underperformance relative to Sensex over shorter periods warrants caution.

Investors seeking exposure to the oil sector may consider Savita as a balanced option but should also evaluate more attractively valued peers for potential upside. The downgrade in Mojo Grade to Sell reinforces a cautious approach, suggesting limited near-term catalysts for significant price appreciation.

Conclusion: Valuation Moderation Reflects Market Realities

Savita Oil Technologies Ltd’s transition from an attractive to a fair valuation grade marks a significant development in its market narrative. While the company’s fundamentals remain sound, the upward adjustment in price multiples has tempered its price attractiveness. Investors should consider this alongside the company’s competitive positioning, sector dynamics, and peer valuations before making allocation decisions.

Long-term investors may find value in Savita’s consistent returns over five and ten years, but near-term caution is warranted given recent underperformance and the downgrade in Mojo Grade. The stock’s current valuation metrics suggest a fair price, with limited margin for error in earnings or market sentiment.

Overall, Savita Oil Technologies remains a noteworthy player in the oil sector, but its evolving valuation profile calls for a measured investment approach, balancing growth prospects against valuation risks.

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