Is Alkem Lab overvalued or undervalued?

As of 15 July 2025, Alkem Lab's valuation grade has moved from attractive to fair, indicating a shift in its market perception. The company is currently fairly valued, with a PE ratio of 27.22, an EV to EBITDA of 23.03, and a PEG ratio of 2.02. In comparison to its peers, Sun Pharma is considered expensive with a PE ratio of 36.25, while Cipla is attractive at a PE of 22.85, highlighting Alkem Lab's relatively balanced valuation within the sector.
Despite its fair valuation, Alkem Lab has underperformed against the Sensex over the past year, with a return of -8.7% compared to the Sensex's 2.36%. This suggests that while the stock is fairly valued based on its financial metrics, market sentiment may be weighing on its performance relative to broader market trends.