Is Chothani Foods overvalued or undervalued?

As of 4 September 2025, the valuation grade for Chothani Foods has moved from risky to very expensive. The company appears to be overvalued based on its current metrics. Key ratios include a PE ratio of 43.95, an EV to EBIT of 45.10, and a ROCE of just 2.23%. These figures suggest that the company is trading at a significant premium compared to its earnings and capital efficiency.
In comparison to its peers, Chothani Foods' PE ratio is lower than Hindustan Unilever's 58.87 and Nestle India's 77.69, but still indicates a high valuation relative to its earnings potential. The PEG ratio of 0.00 further highlights the lack of growth expectations priced into the stock. While Chothani Foods has outperformed the Sensex over the past year with a return of 40.42% compared to the Sensex's -1.98%, the current valuation suggests that investors may be overestimating future growth prospects.