WEBULL

What Goyal Aluminiums Limited's (NSE:GOYALALUM) 32% Share Price Gain Is Not Telling You

Simply Wall St · 5d ago

Goyal Aluminiums Limited (NSE:GOYALALUM) shareholders would be excited to see that the share price has had a great month, posting a 32% gain and recovering from prior weakness. The bad news is that even after the stocks recovery in the last 30 days, shareholders are still underwater by about 9.5% over the last year.

Following the firm bounce in price, given close to half the companies in India have price-to-earnings ratios (or "P/E's") below 25x, you may consider Goyal Aluminiums as a stock to avoid entirely with its 62x P/E ratio. However, the P/E might be quite high for a reason and it requires further investigation to determine if it's justified.

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For example, consider that Goyal Aluminiums' financial performance has been poor lately as its earnings have been in decline. One possibility is that the P/E is high because investors think the company will still do enough to outperform the broader market in the near future. If not, then existing shareholders may be quite nervous about the viability of the share price.

See our latest analysis for Goyal Aluminiums

pe-multiple-vs-industry
NSEI:GOYALALUM Price to Earnings Ratio vs Industry January 6th 2026
We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on Goyal Aluminiums' earnings, revenue and cash flow.

Is There Enough Growth For Goyal Aluminiums?

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

Taking a look back first, the company's earnings per share growth last year wasn't something to get excited about as it posted a disappointing decline of 27%. However, a few very strong years before that means that it was still able to grow EPS by an impressive 62% in total over the last three years. Accordingly, while they would have preferred to keep the run going, shareholders would probably welcome the medium-term rates of earnings growth.

Weighing that recent medium-term earnings trajectory against the broader market's one-year forecast for expansion of 25% shows it's noticeably less attractive on an annualised basis.

In light of this, it's alarming that Goyal Aluminiums' 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. Only the boldest would assume these prices are sustainable as a continuation of recent earnings trends is likely to weigh heavily on the share price eventually.

The Bottom Line On Goyal Aluminiums' P/E

The strong share price surge has got Goyal Aluminiums' P/E rushing to great heights as well. While the price-to-earnings ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of earnings expectations.

Our examination of Goyal Aluminiums 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. Unless the recent medium-term conditions improve markedly, it's very challenging to accept these prices as being reasonable.

We don't want to rain on the parade too much, but we did also find 1 warning sign for Goyal Aluminiums that you need to be mindful of.

If you're unsure about the strength of Goyal Aluminiums' business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.