Is Chothani Foods overvalued or undervalued?

As of 6 May 2025, the valuation grade for Chothani Foods has moved from risky to very expensive, indicating a significant shift in its perceived value. The company is currently considered overvalued. Key ratios include a PE ratio of 26.42, an EV to EBIT of 27.57, and a ROCE of only 2.23%, which raises concerns about its profitability relative to its valuation.
In comparison to its peers, Chothani Foods has a lower PE ratio than Hindustan Unilever Ltd., which stands at 53.88, but is still significantly above the industry average. Other notable peers include Nestlé India Ltd. with a PE of 75.2 and Britannia Industries Ltd. at 61.44, both of which are also categorized as very expensive. The recent performance of Chothani Foods shows a year-to-date decline of 31.75%, contrasting sharply with the Sensex's gain of 5.58%, further supporting the view that the stock is overvalued.