Is Aarey Drugs overvalued or undervalued?

As of 17 November 2025, Aarey Drugs has moved from a fair to a risky valuation grade. The company appears to be overvalued, primarily indicated by its high PE ratio of 75.88 and an EV to EBITDA ratio of 134.14, which are significantly above industry norms. Additionally, the return on equity (ROE) stands at a mere 2.47%, reflecting weak profitability, while the EV to EBIT ratio is notably negative at -315.22, suggesting severe operational challenges.
In comparison to its peers, Aarey Drugs' valuation metrics are concerning. For instance, Elitecon International has a PE ratio of 294.38, indicating a very expensive valuation, while PTC India, which is considered very attractive, has a PE of just 7.56. Aarey Drugs' high valuation ratios, combined with its negative ROCE of -0.07%, further underscore its overvaluation status. Despite recent strong stock performance against the Sensex, with a year-to-date return of 68.93% compared to the Sensex's 8.72%, the underlying financial metrics suggest that the stock may not sustain its current price levels.