Sri KPR Industries Ltd Valuation Shifts Signal Price Attractiveness Concerns

Valuation Metrics Signal Elevated Price Levels

As of 1 Feb 2026, Sri KPR Industries trades at ₹21.35, up 12.01% from the previous close of ₹19.06. Despite this recent uptick, the stock remains closer to its 52-week low of ₹19.01 than the high of ₹38.01, reflecting a subdued longer-term price momentum. The company’s price-to-earnings (P/E) ratio stands at 9.47, which, while modest in absolute terms, has shifted the valuation grade from fair to expensive according to MarketsMOJO’s assessment dated 21 Nov 2024.

In contrast, peer companies within the same industry exhibit a wide range of valuation multiples. For instance, Ester Industries commands a P/E of 241.68, categorised as attractive due to its growth prospects, while Commerl. Synbags and Arrow Greentech trade at P/Es of 26.1 and 12.57 respectively, both rated fair. Notably, Sri KPR’s P/E is significantly lower than these peers, but the valuation grade deterioration suggests that relative to its own historical norms and underlying fundamentals, the stock is now considered expensive.

The price-to-book value (P/BV) ratio of Sri KPR Industries is 0.34, indicating the market values the company at roughly one-third of its book value. This low P/BV might traditionally signal undervaluation; however, the downgrade to an expensive valuation grade implies that other factors, such as earnings quality and return ratios, are weighing heavily on the assessment.

Profitability and Return Ratios Paint a Challenging Picture

Return on capital employed (ROCE) and return on equity (ROE) are critical indicators of operational efficiency and shareholder value creation. Sri KPR’s latest ROCE is a mere 2.16%, while ROE stands at 3.60%. These figures are considerably below industry averages and peer benchmarks, signalling weak profitability and inefficient capital utilisation. Such low returns undermine investor confidence and justify the cautious valuation stance.

Enterprise value multiples further highlight the company’s subdued earnings power. The EV to EBITDA ratio is 0.21, and EV to EBIT is 0.58, both extremely low compared to peers like Shish Industries (EV/EBITDA 38.66) and Pyramid Technoplast (EV/EBITDA 14.42). These disparities suggest that Sri KPR’s earnings before interest, taxes, depreciation and amortisation are minimal relative to its enterprise value, reinforcing the notion of operational underperformance.

Comparative Performance Against Sensex and Industry Peers

Examining Sri KPR’s stock returns relative to the Sensex reveals a pattern of underperformance. Over the past year, the stock has declined by 25.19%, while the Sensex gained 7.18%. Even over a 10-year horizon, Sri KPR has lost 31.02%, starkly contrasting with the Sensex’s robust 230.79% gain. This persistent lag highlights structural challenges within the company or sector that have hindered investor returns.

Shorter-term returns also reflect volatility and weakness. Year-to-date, the stock is down 5.32%, compared to a 3.46% decline in the Sensex. Over one month, Sri KPR fell 6.61%, more than double the Sensex’s 2.84% drop. These figures underscore the stock’s heightened risk profile and susceptibility to market fluctuations.

Mojo Score and Rating Downgrade Reflect Elevated Risk

MarketsMOJO’s proprietary scoring system assigns Sri KPR a Mojo Score of 23.0, categorising it as a Strong Sell. This represents a downgrade from a previous Sell rating as of 21 Nov 2024. The downgrade reflects deteriorating fundamentals, valuation concerns, and weak returns. The company’s market capitalisation grade is 4, indicating a micro-cap status with limited liquidity and higher volatility risk.

Such a rating signals caution for investors, suggesting that the stock’s current price does not adequately compensate for its risks and operational challenges. The downgrade also implies that better opportunities exist within the Plastic Products - Industrial sector and broader market.

Sector and Peer Valuation Context

Within the Plastic Products - Industrial sector, valuation multiples vary widely, reflecting differences in growth prospects, profitability, and market positioning. For example, Premier Polyfilm trades at a P/E of 17.8 with an attractive valuation grade, while Shish Industries is expensive at a P/E of 56.78. Sri KPR’s P/E of 9.47, though lower, is now considered expensive due to its weak earnings quality and returns.

Peers such as Wim Plast and Prakash Pipes offer more compelling valuations with P/Es of 8.47 and 9.69 respectively, both rated attractive or very attractive. These companies also demonstrate stronger operational metrics and growth potential, making them preferable alternatives for investors seeking exposure to this sector.

Outlook and Investor Considerations

Given the current valuation shift to expensive, weak profitability metrics, and sustained underperformance relative to the Sensex and peers, Sri KPR Industries Ltd presents a challenging investment case. The company’s low ROCE and ROE suggest limited capacity to generate shareholder value, while its micro-cap status adds liquidity risk.

Investors should weigh these factors carefully against their risk tolerance and portfolio objectives. The downgrade to a Strong Sell rating by MarketsMOJO underscores the need for caution. Those seeking exposure to the Plastic Products - Industrial sector may find more attractive risk-reward profiles in better-rated peers with stronger fundamentals and more reasonable valuations.

Monitoring future earnings reports, operational improvements, and sector dynamics will be crucial to reassessing Sri KPR’s investment appeal. Until then, the stock’s elevated valuation relative to its fundamentals and historical norms suggests limited upside and heightened downside risk.

Summary

Sri KPR Industries Ltd’s transition from a fair to an expensive valuation grade, despite a modest P/E ratio, reflects underlying concerns about earnings quality and returns. Its weak ROCE and ROE, combined with poor relative stock performance and a Strong Sell rating, indicate that the stock is currently unattractive for investors seeking value or growth in the Plastic Products - Industrial sector. Alternative stocks within the sector offer more compelling fundamentals and valuations, making them preferable choices in the current market environment.

Upgrade at special rates, valid only for the next few days. Claim Your Special Rate →