Is Abbott India overvalued or undervalued?

As of 27 October 2022, Abbott India's valuation grade moved from expensive to very expensive, indicating a significant shift in its perceived market value. The company is currently overvalued, with a PE ratio of 47.32, a Price to Book Value of 19.01, and an EV to EBITDA of 38.88. These ratios suggest that investors are paying a premium for the stock compared to its earnings and book value.
In comparison to its peers, Abbott India's valuation stands out as particularly high; for instance, Sun Pharma has a PE ratio of 35.25 and an EV to EBITDA of 24.91, while Cipla is valued more attractively with a PE of 22.99. Additionally, Abbott's PEG ratio of 2.67 further emphasizes its overvaluation relative to peers like Divi's Lab, which has a PEG of 2.15. Despite outperforming the Sensex over various periods, including a 16% return over the past year compared to the Sensex's 7.63%, the current valuation metrics suggest that investors may be overestimating Abbott India's growth potential.