Shekhawati Industries Ltd Valuation Shifts to Fair Amidst Mixed Market Performance

Valuation Metrics and Market Context

As of 1 Feb 2026, Shekhawati Industries trades at ₹13.94, up 5.93% from the previous close of ₹13.16. The stock’s 52-week range spans from ₹12.34 to ₹29.53, indicating significant volatility over the past year. The company’s current P/E ratio stands at 11.98, a figure that has shifted its valuation grade from attractive to fair according to MarketsMOJO’s grading system. This is a marked change from its previous standing and reflects a recalibration of investor expectations.

In comparison, peer companies within the Garments & Apparels sector exhibit substantially higher P/E ratios, with names such as R&B Denims and SBC Exports trading at 42.61 and 60.86 respectively, both classified as very expensive. This disparity highlights Shekhawati Industries’ relatively moderate valuation, despite the recent downgrade in its attractiveness.

Similarly, the company’s price-to-book value ratio of 2.69 suggests a fair valuation, especially when juxtaposed with sector peers. For instance, Indo Rama Synthetic and Mafatlal Industries, rated as very attractive, trade at P/E ratios of 7.95 and 8.47 respectively, with lower EV/EBITDA multiples, underscoring their more compelling valuation propositions.

Operational Efficiency and Profitability Metrics

Shekhawati Industries boasts robust profitability metrics, with a return on capital employed (ROCE) of 43.23% and return on equity (ROE) of 22.44%. These figures are indicative of efficient capital utilisation and strong earnings generation relative to equity. However, the company’s enterprise value to EBIT (EV/EBIT) ratio of 15.75 and EV/EBITDA of 11.42 suggest that the market is pricing in moderate growth expectations, consistent with the fair valuation grade.

Notably, the PEG ratio remains at zero, signalling either a lack of consensus on earnings growth projections or a flat growth outlook. This contrasts with peers such as SBC Exports and Pashupati Cotspin, which have PEG ratios of 1.75 and 1.4 respectively, reflecting higher anticipated growth rates despite their expensive valuations.

Price Performance Relative to Sensex and Sector

Shekhawati Industries’ recent price performance has been mixed. Over the past week, the stock has marginally outperformed the Sensex, delivering a 1.16% gain versus the benchmark’s 0.90%. However, over longer horizons, the stock has underperformed significantly. The one-month return stands at -26.90%, compared to Sensex’s -2.84%, while year-to-date losses are -25.93% against the Sensex’s -3.46%. The one-year return is particularly stark, with Shekhawati Industries down 47.83% while the Sensex gained 7.18%.

Despite this recent underperformance, the company’s long-term returns remain impressive. Over three and five years, the stock has delivered extraordinary gains of 2,223.33% and 3,300.00% respectively, dwarfing the Sensex’s 38.27% and 77.74% returns over the same periods. Even on a ten-year basis, the stock’s 586.70% return outpaces the Sensex’s 230.79%, underscoring its potential as a long-term wealth creator despite short-term volatility.

Comparative Valuation and Market Sentiment

When benchmarked against its peers, Shekhawati Industries’ valuation appears more reasonable but less compelling than before. The downgrade from attractive to fair valuation grade reflects a market reassessment amid sector-wide volatility and shifting investor sentiment. While the company’s strong ROCE and ROE metrics support its operational strength, the relatively elevated EV/EBITDA and EV/EBIT multiples suggest cautious optimism among investors.

Peers such as Sportking India and Mafatlal Industries maintain attractive valuations with EV/EBITDA ratios of 6.18 and 8.63 respectively, indicating more favourable pricing relative to earnings. Conversely, companies like Pashupati Cotspin and AB Cotspin remain very expensive, with P/E ratios exceeding 90 and EV/EBITDA multiples above 35, signalling stretched valuations that may deter risk-averse investors.

Mojo Score and Rating Update

MarketsMOJO’s latest assessment assigns Shekhawati Industries a Mojo Score of 9.0, accompanied by a Strong Sell grade, upgraded from a Sell rating on 20 Mar 2025. This rating reflects a cautious stance given the company’s valuation shift and recent price volatility. The Market Cap Grade remains modest at 4, consistent with its micro-cap status and liquidity considerations.

The Strong Sell rating underscores the need for investors to exercise prudence, particularly given the stock’s recent sharp declines and the sector’s competitive pressures. The rating also highlights the importance of monitoring valuation trends closely, as the company’s fair valuation grade suggests limited upside potential in the near term.

Outlook and Investor Considerations

Investors analysing Shekhawati Industries should weigh the company’s strong historical returns and solid profitability against the recent valuation moderation and market headwinds. The shift from attractive to fair valuation signals a more cautious market outlook, possibly reflecting concerns over growth sustainability or sector cyclicality.

Given the stock’s micro-cap status and elevated volatility, risk-tolerant investors with a long-term horizon may find value in the company’s underlying fundamentals and past performance. However, those seeking stable, less volatile investments might prefer peers with more attractive valuations and stronger growth visibility.

Ultimately, the company’s current P/E of 11.98 and P/BV of 2.69 position it as a fairly valued stock within its sector, but not without risks. Monitoring quarterly earnings, sector trends, and broader market conditions will be crucial for investors to reassess the stock’s attractiveness going forward.

Conclusion

Shekhawati Industries Ltd’s valuation adjustment from attractive to fair reflects a nuanced market reassessment amid a challenging Garments & Apparels sector environment. While the company’s operational metrics remain robust, the tempered valuation and strong sell rating from MarketsMOJO advise caution. Investors should carefully consider the balance between the company’s long-term growth potential and near-term valuation risks before making investment decisions.

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