Is Ambani Orgochem overvalued or undervalued?

As of 4 June 2025, the valuation grade for Ambani Organics Ltd. has moved from expensive to very expensive, indicating a significant shift in its perceived value. The company is currently overvalued, as evidenced by its PE ratio of -86.50, which suggests negative earnings, alongside a Price to Book Value of 1.92 and an EV to EBITDA of 12.58. These ratios highlight the disconnect between the company's market price and its underlying financial performance.
In comparison to its peers, Ambani Organics Ltd. stands out unfavorably, with its valuation being categorized as very expensive, while other companies in the sector maintain more reasonable metrics. For instance, the average EV to EBITDA ratio among peers is approximately 12.58, which further underscores the overvaluation of Ambani Organics. Additionally, the company's recent stock performance has been lackluster, with a year-to-date return of -19.76%, contrasting sharply with the Sensex's positive return of 6.26% during the same period, reinforcing the notion of overvaluation.