Is Blue Star overvalued or undervalued?

As of 2 July 2025, Blue Star's valuation grade has moved from fair to expensive, indicating a shift towards overvaluation. The company is currently assessed as overvalued based on its high PE ratio of 62.10, a Price to Book Value of 11.79, and an EV to EBITDA of 40.73. In comparison to peers, Voltas has a PE ratio of 52.4 and an EV to EBITDA of 39.33, while Johnson Controls has a significantly higher PE of 80.53, suggesting that Blue Star's valuation is not justified relative to its competitors.
Despite a strong return of 292.75% over the past three years compared to the Sensex's 57.65%, the current financial metrics indicate that Blue Star's stock price may not be sustainable at these levels. With a PEG ratio of 1.54 and a dividend yield of only 0.40%, the potential for growth does not sufficiently compensate for the elevated valuation, reinforcing the conclusion that Blue Star is overvalued in the current market environment.