WEBULL

There's Reason For Concern Over Madhya Bharat Agro Products Limited's (NSE:MBAPL) Massive 35% Price Jump

Simply Wall St · 06/25 00:05

Madhya Bharat Agro Products Limited (NSE:MBAPL) shares have continued their recent momentum with a 35% gain in the last month alone. Looking back a bit further, it's encouraging to see the stock is up 88% in the last year.

Since its price has surged higher, Madhya Bharat Agro Products' price-to-earnings (or "P/E") ratio of 65.1x might make it look like a strong sell right now compared to the market in India, where around half of the companies have P/E ratios below 28x and even P/E's below 16x are quite common. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's so lofty.

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Madhya Bharat Agro Products certainly has been doing a great job lately as it's been growing earnings at a really rapid pace. It seems that many are expecting the strong earnings performance to beat most other companies over the coming period, which has increased investors’ willingness to pay up for the stock. If not, then existing shareholders might be a little nervous about the viability of the share price.

View our latest analysis for Madhya Bharat Agro Products

pe-multiple-vs-industry
NSEI:MBAPL Price to Earnings Ratio vs Industry June 25th 2025
Although there are no analyst estimates available for Madhya Bharat Agro Products, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.

Is There Enough Growth For Madhya Bharat Agro Products?

There's an inherent assumption that a company should far outperform the market for P/E ratios like Madhya Bharat Agro Products' to be considered reasonable.

If we review the last year of earnings growth, the company posted a terrific increase of 131%. Still, EPS has barely risen at all from three years ago in total, which is not ideal. Accordingly, shareholders probably wouldn't have been overly satisfied with the unstable medium-term growth rates.

This is in contrast to the rest of the market, which is expected to grow by 23% over the next year, materially higher than the company's recent medium-term annualised growth rates.

In light of this, it's alarming that Madhya Bharat Agro Products' P/E sits above the majority of other companies. It seems most investors are ignoring the fairly limited recent growth rates and are hoping for a turnaround in the company's business prospects. There's a good chance existing shareholders are setting themselves up for future disappointment if the P/E falls to levels more in line with recent growth rates.

The Key Takeaway

The strong share price surge has got Madhya Bharat Agro Products' P/E rushing to great heights as well. Generally, our preference is to limit the use of the price-to-earnings ratio to establishing what the market thinks about the overall health of a company.

Our examination of Madhya Bharat Agro Products revealed its three-year earnings trends aren't impacting its high P/E anywhere near as much as we would have predicted, given they look worse than current market expectations. When we see weak earnings with slower than market growth, we suspect the share price is at risk of declining, sending the high P/E lower. If recent medium-term earnings trends continue, it will place shareholders' investments at significant risk and potential investors in danger of paying an excessive premium.

Plus, you should also learn about these 2 warning signs we've spotted with Madhya Bharat Agro Products.

It's important to make sure you look for a great company, not just the first idea you come across. So take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).