Is Adani Power overvalued or undervalued?

As of 27 June 2025, Adani Power's valuation grade has moved from expensive to very expensive, indicating a significant shift in its market perception. The company is currently considered overvalued. Key ratios include a PE ratio of 17.42, an EV to EBITDA of 12.09, and a Price to Book Value of 4.00. In comparison, its peers such as NTPC, which is rated very attractive, has a PE ratio of 13.99, and Tata Power Co., rated attractive, has a PE ratio of 32.31, highlighting the disparity in valuation metrics.
Despite a strong return of 10.41% year-to-date compared to the Sensex's 7.58%, the overall valuation suggests that Adani Power's stock price may not be justified given its financial ratios and peer comparisons. The company’s high valuations relative to its peers, combined with its recent grade change, reinforce the conclusion that it is overvalued in the current market environment.