Vikram Thermo (India) Ltd Valuation Shifts Signal Price Attractiveness Change

Valuation Metrics and Recent Changes

As of 19 Feb 2026, Vikram Thermo’s price-to-earnings (P/E) ratio stands at 14.55, a figure that positions the stock within the ‘expensive’ category, a downgrade from its previous ‘very expensive’ status. This reclassification was officially recorded on 12 Jan 2026, coinciding with a downgrade in the company’s overall Mojo Grade from Hold to Sell, now rated at 31.0. The price-to-book value (P/BV) ratio is currently 3.61, which remains elevated but consistent with the ‘expensive’ valuation tier.

Other valuation multiples such as EV to EBIT (10.63), EV to EBITDA (10.01), and EV to Capital Employed (3.79) further corroborate the company’s premium pricing relative to earnings and capital base. The PEG ratio remains at 0.00, indicating either a lack of meaningful earnings growth projections or a data anomaly, which warrants cautious interpretation.

Comparative Peer Analysis

When benchmarked against its peers in the commodity chemicals industry, Vikram Thermo’s valuation appears more moderate. For instance, Stallion India and Sanstar Chemicals are classified as ‘very expensive’ with P/E ratios of 52.39 and 83.72 respectively, and EV/EBITDA multiples soaring above 30 and 80. Platinum Industries, another peer, is also ‘expensive’ but with a higher P/E of 28.98 and EV/EBITDA of 21.46, nearly double Vikram Thermo’s multiples.

Conversely, companies such as I G Petrochems and Gulshan Polyols are deemed ‘very attractive’ or ‘attractive’ with lower valuation multiples, although I G Petrochems is currently loss-making, which complicates direct comparison. Notably, TGV Sraac stands out with a very attractive P/E of 7.58 and EV/EBITDA of 3.55, suggesting significant undervaluation relative to Vikram Thermo.

Financial Performance and Returns

Vikram Thermo’s return on capital employed (ROCE) is robust at 34.32%, while return on equity (ROE) is a healthy 24.80%, underscoring efficient capital utilisation and profitability. Dividend yield remains modest at 0.63%, reflecting a conservative payout policy or reinvestment strategy.

Examining stock performance, Vikram Thermo has underperformed the Sensex over the past year, with a 1-year return of -21.24% compared to the Sensex’s 10.22%. However, over longer horizons, the stock has delivered exceptional gains, with a 3-year return of 178.66%, 5-year return of 379.95%, and an impressive 10-year return of 1068.64%, significantly outpacing the Sensex’s respective returns of 37.26%, 63.15%, and 254.07%.

Price Movement and Market Capitalisation

Vikram Thermo’s current market price is ₹158.00, down 0.75% from the previous close of ₹159.20. The stock has traded within a range of ₹152.15 to ₹160.00 today, with a 52-week high of ₹206.00 and a low of ₹126.85. The company’s market cap grade is rated 4, indicating a mid-sized market capitalisation within its sector.

The recent price softness, combined with the valuation downgrade, suggests that investors are recalibrating expectations amid broader market volatility and sector-specific challenges. The commodity chemicals sector often faces cyclical pressures, and Vikram Thermo’s valuation adjustment may reflect a more cautious outlook on near-term earnings growth.

Investment Implications and Outlook

From an investment perspective, the shift from ‘very expensive’ to ‘expensive’ valuation status may offer a marginally improved entry point for value-conscious investors, though the overall Mojo Grade downgrade to Sell signals caution. The company’s strong ROCE and ROE metrics highlight operational efficiency, but the subdued dividend yield and recent price underperformance relative to the Sensex temper enthusiasm.

Investors should weigh Vikram Thermo’s premium valuation against its historical outperformance and sector peers. While the stock remains more attractively priced than some highly valued competitors, it is less compelling than several ‘very attractive’ peers with lower multiples and potentially higher growth prospects.

Conclusion: Valuation Adjustment Reflects Market Realities

Vikram Thermo’s recent valuation adjustment from very expensive to expensive reflects a nuanced shift in market sentiment, balancing the company’s strong fundamentals against sector headwinds and relative price performance. While the stock’s long-term returns remain impressive, the current rating downgrade and valuation metrics suggest investors should approach with measured expectations.

For those considering exposure to commodity chemicals, Vikram Thermo offers a blend of operational strength and moderate valuation, but alternative peers with more attractive multiples and growth profiles may warrant consideration. Continuous monitoring of earnings trends, sector dynamics, and valuation shifts will be essential for informed decision-making in this space.

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