Is Arabian Petrol. overvalued or undervalued?

As of 22 August 2025, the valuation grade for Arabian Petroleum has moved from fair to attractive, indicating a positive shift in its perceived value. The company is currently considered undervalued, with a PE ratio of 8.47, an EV to EBIT ratio of 7.58, and an EV to EBITDA ratio of 6.89. These ratios suggest that Arabian Petroleum is trading at a significant discount compared to its peers, particularly when considering the high PE ratios of competitors like Solar Industries at 106.29 and Godrej Industries at 43.06.
In comparison to its peers, Arabian Petroleum's PEG ratio of 0.30 further emphasizes its undervaluation, especially against Godrej Industries' PEG of 0.11. The company's strong ROCE of 18.60% and ROE of 19.71% also highlight its efficient use of capital and profitability relative to its equity. Despite recent stock performance lagging behind the Sensex, with a year-to-date decline of 12.45% compared to the Sensex's gain of 5.18%, the underlying fundamentals suggest that Arabian Petroleum presents an attractive investment opportunity at its current price of 75.25.