Is Arabian Petrol. overvalued or undervalued?

As of 28 August 2025, Arabian Petroleum's valuation grade has moved from fair to attractive, indicating a positive shift in its market perception. The company is currently considered undervalued, with a price-to-earnings (PE) ratio of 8.42, a price-to-book value of 1.66, and an EV to EBITDA ratio of 6.86. These ratios suggest that Arabian Petroleum is trading at a significant discount compared to its peers.
In comparison to its industry peers, Arabian Petroleum's PE ratio is notably lower than that of Solar Industries, which has a PE of 99.06, and Godrej Industries, which stands at 41.86. The PEG ratio of Arabian Petroleum is also quite favorable at 0.30, indicating strong growth potential relative to its valuation. Despite recent stock performance showing a decline of 12.06% over the past month compared to a slight decline in the Sensex, the company's strong return on equity (ROE) of 19.71% and return on capital employed (ROCE) of 18.60% reinforce its attractiveness as an investment opportunity.