Editor’s Note
This analysis highlights a significant shift in the valuation of Naksh Precious Metals Ltd, moving it into “very expensive” territory. The elevated P/E ratio, combined with a weakening financial profile and underperformance against the broader market, suggests increased risk for investors at current price levels.
Naksh Precious Metals Ltd, a micro-cap player in the Automobiles sector, has seen its valuation parameters shift markedly, moving from expensive to very expensive territory. This change, coupled with a deteriorating financial profile and weak returns relative to the Sensex, raises concerns about the stock’s price attractiveness and risk profile for investors.
Recent data reveals Naksh Precious Metals Ltd’s price-to-earnings (P/E) ratio stands at 24.64, a level that categorises the stock as very expensive compared to its historical averages and peer group. This is a significant shift from previous valuations where the stock was merely expensive. The price-to-book value (P/BV) ratio is currently 0.97, which might appear modest; however, when combined with other valuation multiples, it underscores a stretched price level relative to the company’s book equity.
Enterprise value to EBIT and EBITDA ratios both sit at 5.05, indicating that the market is pricing the company at over five times its operating earnings. While these multiples might seem reasonable in isolation, they are elevated when compared to the company’s return on capital employed (ROCE) of 4.95% and return on equity (ROE) of 3.93%, which are both notably low. This disparity suggests that the market is valuing Naksh Precious Metals Ltd at a premium despite its limited profitability and capital efficiency.
When benchmarked against peers within the Automobiles sector and related industries, Naksh Precious Metals Ltd’s valuation appears stretched. For instance, India Motor Part, a peer company, trades at a P/E of 16.92 and is considered very attractive, while Naksh’s P/E is significantly higher at 24.64. Other companies such as Indiabulls and Cropster Agro are also classified as very expensive but carry much higher P/E ratios of 78.88 and 81.13 respectively, indicating that Naksh’s valuation is elevated but not the most extreme in the sector.
Moreover, companies like Creative Newtech and Aeroflex Enterprises are trading at more attractive multiples (P/E of 14.77 and 17.6 respectively) and have stronger PEG ratios, suggesting better growth prospects relative to their valuations. Naksh’s PEG ratio is 0.00, which may indicate a lack of meaningful earnings growth or an anomaly in calculation, further complicating the valuation picture.
The stock’s current market price is ₹6.09, marginally down from the previous close of ₹6.10, and well below its 52-week high of ₹11.23. The 52-week low stands at ₹4.16, indicating significant volatility and a downward trend over the longer term.
Naksh Precious Metals Ltd’s market cap grade is rated 4, reflecting its micro-cap status and relatively limited market capitalisation.
Performance-wise, the stock has delivered a mixed return profile. Year-to-date, it has gained 26.88%, outperforming the Sensex which is down 2.28% over the same period. However, over longer horizons, Naksh has underperformed dramatically. The one-year return is -44.03% versus a 9.66% gain for the Sensex, and over five years, the stock has lost 75.88% while the Sensex has surged 59.83%. This stark contrast highlights the stock’s poor long-term performance despite recent short-term gains.
Naksh Precious Metals Ltd currently holds a Mojo Score of 21.0, which places it firmly in the Strong Sell category. This rating was assigned on 18 Aug 2025, marking a downgrade from a previously ungraded status. The Mojo Grade reflects a comprehensive assessment of the company’s fundamentals, valuation, momentum, and quality metrics, signalling significant caution for investors.
The downgrade to Strong Sell is consistent with the company’s deteriorating financial health and stretched valuation multiples. The low ROCE and ROE figures, combined with a lack of dividend yield and a PEG ratio of zero, suggest limited growth prospects and poor capital returns. These factors weigh heavily against the current price level, which appears unjustified given the company’s fundamentals.
Operating within the Automobiles sector, Naksh Precious Metals Ltd faces competitive pressures and cyclical demand patterns. The sector has seen a mix of valuation trends, with some companies trading at attractive multiples due to robust earnings growth and others marked as risky or very expensive. Naksh’s valuation shift to very expensive contrasts with its weak operational metrics, making it an outlier in a sector where investors increasingly favour quality and growth.
Investors should also consider the broader market context. While the Sensex has delivered a 10-year return of 259.08%, Naksh Precious Metals Ltd has declined by 62.22% over the same period. This divergence underscores the stock’s underperformance and the challenges it faces in regaining investor confidence.