Sukhjit Starch & Chemicals Ltd: Valuation Shifts Signal Renewed Price Attractiveness

Valuation Metrics: A Closer Look

The company’s current P/E ratio stands at 35.59, a figure that, while elevated compared to some peers, reflects a more reasonable valuation than previously assessed. This marks a shift from a “very attractive” valuation grade to simply “attractive,” indicating that while the stock remains favourably priced, the margin of undervaluation has narrowed. The P/BV ratio is currently at 0.99, suggesting the stock is trading close to its book value, which often appeals to value investors looking for a margin of safety.

Other valuation multiples provide further context: the enterprise value to EBIT (EV/EBIT) ratio is 23.37, and the EV to EBITDA ratio is 11.70. These figures, while not inexpensive, are competitive within the sector, especially when compared to companies like Sanstar and Stallion India, which are rated as “very expensive” with P/E ratios of 82.04 and 48.76 respectively. This relative affordability could be a key factor in the stock’s recent 9.77% day gain, reflecting renewed buying interest.

Comparative Sector Analysis

Within the Other Agricultural Products sector, Sukhjit Starch & Chemicals Ltd’s valuation stands out as more accessible. For instance, Platinum Industries is rated “expensive” with a P/E of 28.58, while Titan Biotech is “very expensive” at 45.23. On the other hand, companies like Gem Aromatics and Gulshan Polyols maintain “attractive” or “very attractive” valuations with P/E ratios of 17.92 and 22.38 respectively, highlighting a broad spectrum of valuation levels within the sector.

Interestingly, some peers such as Oriental Aromatics exhibit extreme valuation anomalies, with a P/E ratio exceeding 1,200, which distorts sector averages and underscores the importance of nuanced analysis when comparing multiples.

Financial Performance and Returns

Despite the valuation improvement, Sukhjit Starch’s recent returns have lagged behind the broader market. Year-to-date, the stock has declined by 6.47%, compared to the Sensex’s 2.82% fall. Over the past year, the stock’s return was negative 16.42%, while the Sensex gained 9.35%. Even over three years, the stock underperformed the benchmark, delivering a -12.30% return against the Sensex’s 36.45% rise.

However, the longer-term picture is more encouraging. Over five years, Sukhjit Starch has outperformed the Sensex with a 90.35% gain versus 62.73%, and over ten years, it has delivered a 207.12% return, only slightly behind the Sensex’s 249.29%. This suggests that while short-term volatility has weighed on the stock, its long-term fundamentals and growth prospects remain intact.

Profitability and Efficiency Metrics

The company’s return on capital employed (ROCE) is currently 5.39%, and return on equity (ROE) stands at 4.16%. These modest profitability ratios indicate room for operational improvement, especially when compared to sector leaders. Dividend yield remains low at 0.58%, reflecting a conservative payout policy or reinvestment strategy.

Enterprise value to capital employed (EV/CE) and EV to sales ratios are both at 0.99 and 0.62 respectively, signalling that the market values the company’s capital base and sales at nearly book value levels, consistent with the P/BV ratio.

Market Capitalisation and Mojo Score

Sukhjit Starch & Chemicals Ltd holds a market cap grade of 4, indicating a mid-sized company within its sector. Its Mojo Score has improved to 34.0, with the Mojo Grade upgraded from “Strong Sell” to “Sell” as of 23 December 2025. This upgrade reflects the positive shift in valuation and some stabilisation in fundamentals, though the overall sentiment remains cautious.

Price Movement and Trading Range

The stock closed at ₹173.60 on 23 February 2026, up 9.77% on the day, with an intraday range between ₹163.00 and ₹173.60. The 52-week high and low stand at ₹238.00 and ₹143.80 respectively, indicating a wide trading band and potential volatility. The recent price action suggests renewed investor interest, possibly driven by the improved valuation outlook and relative sector attractiveness.

Investment Outlook and Peer Comparison

While Sukhjit Starch & Chemicals Ltd’s valuation has become less aggressively attractive, it remains a compelling option for investors seeking exposure to the Other Agricultural Products sector at reasonable multiples. The company’s P/E and P/BV ratios are more palatable than many peers, especially those rated “very expensive.” However, the modest profitability metrics and recent underperformance relative to the Sensex warrant a cautious approach.

Investors should weigh the company’s long-term growth potential and improved valuation against the backdrop of sector dynamics and broader market conditions. The upgrade in Mojo Grade to “Sell” from “Strong Sell” signals a tentative improvement but stops short of a full endorsement, suggesting that further fundamental progress is needed to justify a more bullish stance.

Conclusion: Valuation Shift Offers Cautious Optimism

Sukhjit Starch & Chemicals Ltd’s transition from a very attractive to an attractive valuation grade reflects a nuanced change in market perception. While the stock is no longer a deep value play, its multiples remain reasonable relative to many peers in the Other Agricultural Products sector. The company’s improving Mojo Grade and recent price gains suggest that investors are beginning to recognise this shift.

However, the stock’s modest profitability ratios and recent underperformance compared to the Sensex counsel prudence. Investors should monitor upcoming quarterly results and sector developments closely to assess whether the company can sustain operational improvements and justify a further upgrade in valuation and sentiment.

In summary, Sukhjit Starch & Chemicals Ltd presents a cautiously optimistic investment case, with valuation parameters signalling a more balanced risk-reward profile than before. For investors seeking exposure to agricultural chemicals and starch products, the stock merits consideration within a diversified portfolio, particularly given its attractive relative valuation and improving market sentiment.

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