Vardhman Textiles Ltd Valuation Shifts Signal Changing Market Sentiment

Valuation Metrics and Market Performance

As of 16 Feb 2026, Vardhman Textiles Ltd trades at ₹510.20, up 5.38% from the previous close of ₹484.15. The stock has approached its 52-week high of ₹546.00, signalling strong upward momentum. Over the past month, the stock has surged 22.81%, vastly outperforming the Sensex, which declined 1.20% in the same period. Year-to-date returns stand at 16.82%, compared to a 3.04% fall in the benchmark index, underscoring the stock’s resilience amid broader market volatility.

The company’s market capitalisation grade remains modest at 3, reflecting its mid-cap status within the Garments & Apparels sector. The recent upgrade in the Mojo Grade from Sell to Hold on 3 Feb 2026, with a current Mojo Score of 51.0, indicates a cautious but improving outlook from MarketsMOJO analysts.

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

Vardhman Textiles’ P/E ratio currently stands at 18.50, a level that has pushed its valuation grade from fair to expensive. This multiple is moderate relative to some peers but elevated compared to the company’s historical P/E range, which typically hovered closer to 15-17 times earnings. The upward shift suggests that investors are pricing in expectations of earnings growth or improved operational efficiency.

In comparison, Welspun Living trades at a significantly higher P/E of 57.4 but is rated fair due to its growth prospects, while Trident, with a P/E of 33.32, is considered attractive given its PEG ratio of 0.85, indicating reasonable valuation relative to growth. Arvind Ltd, another peer, is rated very attractive with a P/E of 23.7 and a PEG of 0.6, signalling better value for growth investors.

The price-to-book value (P/BV) ratio for Vardhman Textiles is 1.45, which is modestly above the sector average but still within a reasonable range for a company with steady returns on equity (ROE) of 8.29%. This P/BV level suggests that the market is willing to pay a premium over the company’s net asset value, reflecting confidence in its asset utilisation and future profitability.

Enterprise Value Multiples and Profitability Metrics

Examining enterprise value (EV) multiples, Vardhman Textiles shows an EV to EBIT ratio of 19.20 and an EV to EBITDA of 12.25. These figures are broadly in line with sector norms, although slightly higher than some peers like Arvind Ltd (EV/EBITDA 12.11) and Trident (16.51). The EV to capital employed ratio of 1.44 and EV to sales of 1.53 further indicate that the company’s valuation is on the higher side but not excessively stretched.

Profitability metrics remain moderate, with a return on capital employed (ROCE) of 7.93% and ROE of 8.29%. These returns are stable but below the levels seen in more aggressively growing peers, which may justify the cautious upgrade to a Hold rating rather than a Buy. Dividend yield at 0.98% is modest, reflecting a balanced approach to shareholder returns and reinvestment.

Comparative Valuation within the Garments & Apparels Sector

When benchmarked against peers, Vardhman Textiles’ valuation appears elevated but not extreme. For instance, Garware Technical Fibres is rated very expensive with a P/E of 33.53 and EV/EBITDA of 24.01, while Indo Count Industries and Pearl Global Industries trade at fair valuations with P/Es of 36.46 and 28.25 respectively. Swan Corporation and Alok Industries are classified as risky due to loss-making operations, highlighting Vardhman’s relative stability.

Notably, the company’s PEG ratio is reported as zero, indicating either flat or negligible earnings growth expectations factored into the price, which contrasts with peers like Trident and Arvind Ltd that have PEG ratios below 1, signalling undervaluation relative to growth. This discrepancy suggests that while the stock is expensive on a P/E basis, the market may be pricing in a conservative growth outlook.

Stock Returns and Market Context

Vardhman Textiles has delivered impressive returns over multiple time horizons, significantly outperforming the Sensex. Over five years, the stock has gained 148.15%, compared to the Sensex’s 60.30%. Even over one year, the stock’s 16.40% return surpasses the benchmark’s 8.52%. However, over the last ten years, the stock’s 239.54% appreciation slightly trails the Sensex’s 259.46%, indicating periods of relative underperformance in the longer term.

This strong recent performance has contributed to the valuation re-rating, as investors reward the company’s operational resilience and sector tailwinds in garments and apparels. Yet, the moderate profitability and cautious growth outlook temper enthusiasm, resulting in a Hold rating rather than a more aggressive Buy recommendation.

Outlook and Investor Considerations

Investors considering Vardhman Textiles should weigh the stock’s recent price appreciation and elevated valuation against its moderate profitability and sector dynamics. The upgrade from Sell to Hold by MarketsMOJO reflects a balanced view acknowledging improved market sentiment but cautioning against overpaying amid limited growth visibility.

Key risks include potential margin pressures from raw material cost fluctuations and competitive intensity in the garments and apparels sector. Conversely, steady demand recovery and operational efficiencies could support earnings growth, justifying the current premium valuation.

Given the current P/E of 18.50 and P/BV of 1.45, the stock trades at a premium to its historical averages but remains below the valuations of some high-growth peers. This positioning may appeal to investors seeking exposure to a relatively stable mid-cap textile player with upside potential, albeit with tempered expectations.

Overall, Vardhman Textiles Ltd’s valuation shift signals a market reassessment of its prospects, moving from fair to expensive territory. While the stock’s strong recent returns validate investor interest, the Hold rating and moderate Mojo Score of 51.0 suggest a cautious stance pending clearer earnings momentum.

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