Sky Gold & Diamonds Ltd Valuation Shifts to Fair Amid Strong Market Performance

Valuation Grade Transition and Market Reaction

On 6 February 2026, Sky Gold & Diamonds Ltd’s valuation grade was upgraded from Hold to Buy, accompanied by a Mojo Score improvement to 74.0, signalling enhanced investor confidence. However, the valuation grade itself shifted from “attractive” to “fair,” indicating that while the stock remains a buy, its price multiples have expanded, tempering the previous bargain status. The stock price has surged 9.81% on the day of news generation (13 February 2026), closing at ₹367.65, up from the previous close of ₹334.80. Intraday highs reached ₹383.60, approaching the 52-week high of ₹403.90, underscoring strong buying momentum.

Price-to-Earnings and Price-to-Book Value Analysis

Sky Gold & Diamonds currently trades at a P/E ratio of 24.83, a level that is elevated compared to its historical valuation but remains moderate relative to some peers. For context, Thangamayil Jewellery, a sector peer, commands a P/E of 46.66, categorised as expensive, while PC Jeweller trades at a more attractive P/E of 12.21. The company’s P/BV ratio stands at 5.49, reflecting a premium over book value but consistent with sector norms for quality players. This contrasts with P N Gadgil Jewellery’s fair valuation at a P/E of 20.22 and Goldiam International’s fair rating at a P/E of 27.67. The upward shift in Sky Gold’s multiples suggests that investors are pricing in stronger growth prospects and improved profitability metrics.

Enterprise Value Multiples and Profitability Metrics

Examining enterprise value (EV) multiples, Sky Gold & Diamonds posts an EV/EBITDA of 17.60 and EV/EBIT of 18.22, which are slightly higher than some peers but still within reasonable bounds for the sector. For instance, PC Jeweller’s EV/EBITDA is 14.55, while Thangamayil Jewellery’s is a lofty 28.9. The company’s return on capital employed (ROCE) and return on equity (ROE) are robust at 17.21% and 17.87% respectively, signalling efficient capital utilisation and healthy profitability. These metrics support the premium valuation, as investors reward operational excellence and sustainable earnings growth.

Growth Prospects and PEG Ratio Insights

Sky Gold & Diamonds’ PEG ratio of 0.25 is notably low, indicating that the stock’s price growth is not fully reflecting its earnings growth potential. This metric suggests undervaluation relative to growth, a positive sign for investors seeking growth at a reasonable price. Comparatively, Thangamayil Jewellery’s PEG is 0.55, and PC Jeweller’s is 0.5, reinforcing Sky Gold’s relative attractiveness on a growth-adjusted basis despite the fair valuation grade.

Comparative Performance and Market Context

Sky Gold & Diamonds has outperformed the broader market significantly over multiple time horizons. Year-to-date, the stock has gained 10.24%, while the Sensex has declined 1.81%. Over the past month, the stock rose 11.53% compared to a marginal Sensex decline of 0.24%. Even over one week, the stock surged 17.37%, dwarfing the Sensex’s 0.43% gain. Longer-term returns are even more striking, with a three-year return of 1,093.28% versus the Sensex’s 37.89%, and a five-year return of 3,951.24% compared to the Sensex’s 62.34%. These figures highlight the company’s exceptional growth trajectory and justify a premium valuation relative to the benchmark index.

Sector Positioning and Peer Comparison

Within the Gems, Jewellery and Watches sector, Sky Gold & Diamonds occupies a strong position, balancing growth and profitability. While some peers like Rajesh Exports are classified as very expensive with a P/E of 41.39, others such as Motisons Jewellery and Senco Gold maintain attractive valuations with P/E ratios near 24. The company’s valuation grade of “fair” reflects a middle ground, acknowledging both the premium multiples and the underlying quality metrics. Bluestone Jewellery remains a risky outlier due to loss-making status, underscoring Sky Gold’s relative stability.

Investment Outlook and Quality Assessment

MarketsMOJO’s comprehensive analysis assigns Sky Gold & Diamonds a Mojo Grade of Buy, upgraded from Hold, reflecting improved confidence in the company’s fundamentals and market prospects. The Market Cap Grade of 3 indicates a mid-sized company with growth potential. The combination of strong returns on capital, reasonable EV multiples, and a low PEG ratio suggests that while valuation has become less attractive compared to historical levels, the stock remains a compelling buy for investors seeking exposure to the gems and jewellery sector’s growth story.

Risks and Considerations

Despite the positive outlook, investors should remain mindful of valuation risks as the stock’s P/E and P/BV ratios have expanded, reducing the margin of safety. The sector is also subject to fluctuations in gold prices, consumer demand, and regulatory changes, which could impact earnings visibility. Additionally, the absence of a dividend yield may deter income-focused investors. Monitoring quarterly earnings and sector trends will be crucial to reassessing the stock’s valuation attractiveness going forward.

Conclusion

Sky Gold & Diamonds Ltd’s recent valuation shift from attractive to fair reflects a maturing growth story with expanding multiples justified by strong profitability and market outperformance. While the stock no longer offers a deep value proposition, its low PEG ratio and solid returns on capital underpin a favourable investment case. The upgrade to a Buy rating by MarketsMOJO, supported by a robust Mojo Score of 74.0, signals confidence in the company’s prospects within the Gems, Jewellery and Watches sector. Investors seeking exposure to a high-growth jewellery player with improving fundamentals may find Sky Gold & Diamonds a compelling addition to their portfolio, albeit at a more moderate valuation level than before.

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