Supreme Power Equipment Ltd Valuation Shifts to Fair Amid Market Pressure

Valuation Metrics: A Closer Look

Supreme Power’s current P/E ratio of 21.9 marks a significant moderation from previous levels that had placed it in the expensive category. This adjustment aligns the stock more closely with sector peers and historical averages, suggesting the market is recalibrating expectations. The price-to-book value (P/BV) ratio at 4.0, while still elevated, also supports the notion of a fairer valuation compared to prior periods when the stock commanded a higher premium.

Other valuation multiples such as EV/EBITDA at 19.03 and EV/EBIT at 19.36 remain on the higher side but are consistent with the company’s operational efficiency and profitability metrics. The PEG ratio of 0.67 indicates that the stock is trading at a discount relative to its earnings growth potential, which could be an attractive feature for growth-oriented investors.

Comparative Industry Analysis

When benchmarked against key competitors in the Other Electrical Equipment sector, Supreme Power’s valuation appears more balanced. For instance, Yash Highvoltage, a peer, trades at a P/E of 62.54 and EV/EBITDA of 40.88, categorised as ‘Does not qualify’ due to stretched valuations. Similarly, Artemis Electrical is deemed ‘Very Expensive’ with a P/E of 45.59 and EV/EBITDA of 32.51. In contrast, Mangal Electrical is rated ‘Very Attractive’ with a P/E of 16.44 and EV/EBITDA of 8.22, highlighting the spectrum of valuation within the sector.

Supreme Power’s fair valuation grade, downgraded from hold to sell on 7 January 2026, reflects this relative positioning. The company’s Mojo Score of 41.0 and Mojo Grade of Sell further underscore the cautious stance adopted by analysts, despite the improved valuation multiples.

Price Performance and Market Sentiment

The stock’s recent price action has been disappointing. On 11 February 2026, Supreme Power’s share price closed at ₹164.15, down 9.11% from the previous close of ₹180.60. The intraday range was ₹162.00 to ₹171.05, indicating heightened volatility. Over the past week, the stock has declined 9.83%, sharply underperforming the Sensex, which gained 0.81% in the same period. The one-month return is also negative at -6.47%, compared to a 0.98% rise in the benchmark index.

Year-to-date, Supreme Power has lost 13.51%, while the Sensex is down a modest 0.74%. Despite this short-term weakness, the stock has delivered a 13.4% return over the past year, outperforming the Sensex’s 10.92% gain. This mixed performance suggests that while the company has demonstrated resilience over the medium term, recent market dynamics and valuation adjustments have weighed heavily on investor sentiment.

Operational Efficiency and Profitability

Supreme Power’s return on capital employed (ROCE) stands at a robust 17.49%, with return on equity (ROE) at 18.25%. These figures indicate efficient utilisation of capital and strong profitability, which justify a valuation premium to some extent. However, the absence of a dividend yield may deter income-focused investors, especially in a market environment where yield plays a critical role in stock selection.

The company’s EV to capital employed ratio of 3.39 and EV to sales of 2.99 further reflect operational leverage and revenue generation capacity. These metrics, combined with the PEG ratio below 1, suggest that Supreme Power retains growth potential, albeit tempered by recent price declines and market caution.

Peer Comparison Highlights Valuation Risks and Opportunities

Among peers, Supreme Power’s valuation is more attractive than several high-flying stocks but less so than some undervalued players. Quadrant Future and W S Industries are loss-making and thus excluded from direct valuation comparison. Meanwhile, companies like Mangal Electrical offer a ‘Very Attractive’ valuation with a P/E of 16.44, presenting potential alternatives for value investors.

Supreme Power’s fair valuation status positions it as a middle-ground option within the sector, balancing growth prospects with reasonable price levels. However, the downgrade to a sell rating and the Mojo Grade of 41.0 indicate that analysts perceive risks outweighing rewards at current levels.

Investment Outlook and Strategic Considerations

Investors evaluating Supreme Power Equipment Ltd should weigh the improved valuation metrics against the prevailing negative market sentiment and recent price weakness. The shift from an expensive to a fair valuation grade offers a more compelling entry point, but the downgrade in Mojo Grade to Sell signals caution.

Given the company’s solid profitability ratios and reasonable PEG, there remains a case for selective accumulation, particularly for investors with a medium to long-term horizon. However, the stock’s underperformance relative to the Sensex and sector peers in the short term suggests that near-term volatility may persist.

Comparative analysis with sector peers reveals that while Supreme Power is not the cheapest option, it offers a balanced risk-reward profile. Investors seeking lower valuation multiples might consider alternatives like Mangal Electrical, whereas those prioritising growth may look at higher-rated stocks despite their premium prices.

Ultimately, the decision to invest should factor in broader market conditions, sectoral trends, and individual risk tolerance, with valuation shifts serving as a key input in the decision-making process.

Summary

Supreme Power Equipment Ltd’s transition to a fair valuation grade, reflected in a P/E of 21.9 and P/BV of 4.0, marks a significant recalibration of market expectations. Despite this, the stock’s sharp price decline and downgrade to a Sell rating highlight investor concerns. Operational metrics remain strong, but the absence of dividend yield and recent underperformance relative to the Sensex temper enthusiasm. Peer comparisons suggest the stock is fairly valued but not the most attractive in the sector, underscoring the need for careful stock selection within Other Electrical Equipment.

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