Is Chothani Foods overvalued or undervalued?

As of 31 October 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 overvalued, with a PE ratio of 310.80, an EV to EBIT of 44.58, and an EV to Sales ratio of 5.57. These metrics highlight a stark contrast to its peers, such as Hindustan Unilever with a PE ratio of 54.79 and Nestle India at 81.91, both of which are also categorized as very expensive but are significantly lower than Chothani's valuation ratios.
Chothani Foods' financial performance is concerning, as evidenced by its low ROCE of 2.23% and ROE of 0.90%. The company's high valuation ratios, coupled with its underwhelming returns compared to the Sensex over the past month and year, reinforce the notion that it is overvalued in the current market. Despite a strong performance over the longer term, the current valuation does not seem justified given the company's financial metrics and peer comparisons.