Is Allied Digital overvalued or undervalued?

As of 6 August 2025, the valuation grade for Allied Digital has moved from expensive to very expensive, indicating a significant shift in its perceived market value. The company is currently considered overvalued. Key ratios include a PE Ratio of 27.22, an EV to EBIT of 36.32, and an EV to EBITDA of 16.03, all of which suggest that the stock is trading at a premium compared to its earnings and cash flow generation capabilities.
In comparison to its peers, TCS has a more attractive PE Ratio of 22.26 and an EV to EBITDA of 15.68, while Infosys stands at a PE Ratio of 21.88 and an EV to EBITDA of 14.34, both indicating better value propositions. Additionally, Allied Digital's ROCE and ROE are relatively low at 5.09% and 5.34%, respectively, further supporting the notion of overvaluation. Despite recent strong performance against the Sensex over the long term, the current valuation metrics suggest that investors should exercise caution.