Is Ambika Cotton overvalued or undervalued?

As of 15 July 2025, Ambika Cotton's valuation grade has moved from fair to expensive, indicating a shift in perception regarding its market value. The company is currently considered overvalued based on its key financial ratios, which include a PE ratio of 14.28, an EV to EBITDA of 7.57, and a PEG ratio of 3.26.
In comparison to its peers, Ambika Cotton's PE ratio is significantly lower than K P R Mill Ltd, which stands at 49.52, but higher than Vardhman Textile's PE of 16.41. This suggests that while Ambika Cotton is more attractively priced than some competitors, it still faces challenges in justifying its current valuation. Additionally, its recent stock performance has outpaced the Sensex over the past week and month, but it has underperformed over the longer term, particularly in the one-year and three-year periods. Overall, the current valuation suggests that Ambika Cotton may not provide sufficient upside potential at its current price of 1640.00.