Is BSE overvalued or undervalued?

As of 6 November 2023, BSE's valuation grade has moved from expensive to very expensive, indicating a significant shift in its perceived market value. The company is currently overvalued based on its high valuation ratios, including a PE ratio of 89.95, an EV to EBITDA of 68.14, and a Price to Book Value of 26.93. These figures suggest that the stock is trading at a premium compared to its earnings and book value.
In comparison to its peers, BSE stands out with a much higher PE ratio than the industry average, which raises concerns about its sustainability. For instance, while BSE's PEG ratio is 0.43, which typically indicates growth potential, the overall high valuation metrics suggest that the market may be overestimating future growth. Additionally, BSE has outperformed the Sensex significantly over various time frames, with a 1-year return of 232.46% compared to the Sensex's 7.82%, further complicating the valuation narrative. Overall, BSE appears to be overvalued in the current market context.