Is Arrowhead Sepera overvalued or undervalued?

As of 3 November 2025, the valuation grade for Arrowhead Sepera has moved from very expensive to expensive, indicating a slight improvement in its valuation outlook. However, the company remains overvalued based on its current financial metrics. The PE ratio stands at 40.17, while the EV to EBITDA ratio is 17.59, both of which are significantly higher than many peers in the industrial manufacturing sector. For instance, Rail Vikas has a PE ratio of 57.52, and Tube Investments shows a PE of 90.93, highlighting that Arrowhead Sepera, while expensive, is comparatively more attractive than some of its peers.
Despite this relative positioning, Arrowhead Sepera's ROCE is only 5.50% and ROE is 2.47%, suggesting inefficiencies in generating returns on capital and equity. Given these ratios and the overall market context, Arrowhead Sepera is deemed overvalued. The company's stock has underperformed year-to-date with a return of -39.04%, contrasting sharply with the Sensex's gain of 7.47%, further reinforcing the notion that the stock may not be a favorable investment at its current price of 88.00.