Is 3i Infotech overvalued or undervalued?

As of 13 November 2025, 3i Infotech's valuation grade has moved from very attractive to risky, indicating a significant shift in its market perception. The company appears to be overvalued, given its low PE ratio of 5.40 and a high EV to EBITDA ratio of 16.85, which suggests that investors are paying a premium relative to its earnings potential. Additionally, the PEG ratio stands at an exceptionally low 0.03, further emphasizing the disconnect between its price and growth expectations.
In comparison to peers, TCS has a PE ratio of 22.34 and Infosys has a PE of 22.78, both indicating a much higher valuation than 3i Infotech. The disparity in valuations is stark, especially when considering that 3i Infotech's ROE is 8.26%, which is underwhelming compared to industry standards. Recent performance shows that while the stock has outperformed the Sensex over the past week with a return of 7.03%, it has significantly lagged over longer periods, including a year-to-date decline of 30.83% compared to the Sensex's 8.11% gain. This trend reinforces the view that 3i Infotech is currently overvalued.