Vardhman Textiles Ltd Valuation Shifts Amid Strong Price Rally

Valuation Metrics Reflect Elevated Price Levels

As of 4 February 2026, Vardhman Textiles Ltd trades at a price of ₹511.85, up 12.12% from the previous close of ₹456.50, and touching a 52-week high of ₹546.00 during the session. This price appreciation has coincided with a re-rating of the stock’s valuation parameters. The company’s price-to-earnings (P/E) ratio currently stands at 18.56, which has pushed its valuation grade from fair to expensive according to MarketsMOJO’s assessment.

The price-to-book value (P/BV) ratio is 1.46, signalling a moderate premium over the book value but still within reasonable bounds for the Garments & Apparels sector. Meanwhile, enterprise value to EBITDA (EV/EBITDA) is at 12.29, which is relatively lower than some peers but consistent with the company’s operational efficiency.

Comparative Analysis with Industry Peers

When benchmarked against key competitors, Vardhman Textiles’ valuation appears more expensive than several peers. For instance, Trident and Welspun Living maintain fair valuations with P/E ratios of 32.97 and 39.92 respectively, albeit at higher multiples reflecting their growth prospects or market positioning. Arvind Ltd and Raymond Lifestyle, rated as very attractive, trade at P/E multiples of 22.36 and 63.07 respectively, with Arvind’s EV/EBITDA at 11.51 indicating better operational leverage.

Conversely, companies like Swan Corp and Alok Industries are classified as risky due to volatile earnings or losses, with Swan Corp’s EV/EBITDA showing a negative figure and Alok Industries being loss-making. Pearl Global Industries is also expensive with a P/E of 31.05, while Garware Technologies is very expensive at 36.18.

Financial Performance and Returns Contextualise Valuation

Vardhman Textiles’ return on capital employed (ROCE) and return on equity (ROE) stand at 7.93% and 8.29% respectively, indicating moderate profitability relative to capital invested. Dividend yield remains modest at 0.98%, which may limit income appeal but aligns with the company’s reinvestment strategy.

In terms of stock performance, Vardhman Textiles has outperformed the Sensex significantly across multiple time horizons. The stock has delivered a 24.7% return over the past week compared to Sensex’s 2.3%, and a 17.2% year-to-date gain against the Sensex’s negative 1.74%. Over the last one year, the stock returned 15.26%, nearly doubling the Sensex’s 8.49%. Longer-term returns are even more impressive, with a 5-year return of 137.63% versus Sensex’s 66.63%, and a 10-year return of 228.87%, closely tracking the Sensex’s 245.7%.

Mojo Score Upgrade Reflects Improved Market Perception

MarketsMOJO has upgraded Vardhman Textiles’ Mojo Grade from Sell to Hold on 3 February 2026, with a current Mojo Score of 51.0. This upgrade reflects a more balanced view of the company’s prospects, factoring in recent price momentum and valuation adjustments. The Market Cap Grade remains at 3, indicating a mid-sized market capitalisation within the Garments & Apparels sector.

Despite the upgrade, the valuation grade shift to expensive suggests caution. Investors should weigh the company’s solid historical returns and operational metrics against the premium now demanded by the market. The PEG ratio remains at zero, signalling either flat earnings growth expectations or data unavailability, which warrants further scrutiny.

Sector and Market Context

The Garments & Apparels sector has seen mixed valuations, with some companies trading at very attractive levels due to growth potential or turnaround prospects, while others remain risky or expensive. Vardhman Textiles’ current valuation places it in the expensive category, which may limit upside unless earnings growth accelerates or operational efficiencies improve.

Market volatility and macroeconomic factors such as raw material costs, export demand, and consumer spending trends will continue to influence the sector’s outlook. Vardhman Textiles’ ability to sustain its recent price gains and justify its valuation premium will depend on navigating these challenges effectively.

Investor Takeaway: Balancing Valuation and Growth Prospects

Vardhman Textiles Ltd’s recent valuation upgrade to expensive signals that the market is pricing in expectations of sustained earnings growth or operational improvements. However, the company’s current ROCE and ROE metrics suggest moderate profitability, which may not fully justify the premium at present.

Investors should consider the stock’s strong relative returns against the Sensex and peers, recognising that past performance does not guarantee future results. The modest dividend yield and zero PEG ratio highlight the need for careful earnings growth analysis before committing fresh capital.

Given the sector’s competitive landscape and valuation dispersion, a cautious approach is advisable. Monitoring quarterly earnings, margin trends, and broader economic indicators will be crucial to assess whether Vardhman Textiles can sustain its valuation premium or if a reversion to fair value levels is likely.

Conclusion

Vardhman Textiles Ltd’s shift from fair to expensive valuation reflects a market reassessment amid strong price appreciation and solid returns relative to benchmarks. While the upgrade in Mojo Grade to Hold indicates improved sentiment, the elevated P/E and P/BV ratios warrant prudence. Investors should balance the company’s historical outperformance and operational metrics against the premium valuation and sector risks. Continuous monitoring of financial results and market conditions will be essential to navigate this evolving investment landscape effectively.

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