Is Allcargo Gati overvalued or undervalued?

As of 6 November 2023, the valuation grade for Allcargo Gati has moved from expensive to risky, indicating a shift in perception regarding its financial health. The company is currently considered overvalued, with a PE ratio of 105.00, an EV to EBITDA of 16.74, and a PEG ratio of 0.73. These figures suggest that the stock price does not align well with the underlying earnings potential, especially given the negative ROCE of -0.64% and a low ROE of 1.20%.
In comparison to its peers, Allcargo Gati's valuation stands out unfavorably; for instance, Container Corporation has a PE of 37.54 and Delhivery has a PE of 163.66, both of which reflect more reasonable valuations relative to their earnings. The company’s recent stock performance has also lagged behind the Sensex, with a year-to-date decline of 22.43% compared to the Sensex's gain of 5.59%. This combination of high valuation ratios and poor relative performance reinforces the conclusion that Allcargo Gati is overvalued in the current market environment.