Is Craftsman Auto overvalued or undervalued?

Aug 24 2025 08:08 AM IST
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As of August 22, 2025, Craftsman Auto is considered overvalued with a PE ratio of 69.65 and financial metrics like ROCE at 9.54% and ROE at 7.36%, indicating its high valuation is not justified by its fundamentals despite a year-to-date return of 27.15%.
As of 22 August 2025, Craftsman Auto's valuation grade has moved from fair to expensive. The company is currently overvalued, with a PE ratio of 69.65, a Price to Book Value of 5.67, and an EV to EBITDA ratio of 20.48. In comparison, peers such as Rail Vikas and Tube Investments have PE ratios of 56.64 and 91.48, respectively, indicating that Craftsman Auto is priced at a premium relative to its industry.

The company's financial performance shows a ROCE of 9.54% and a ROE of 7.36%, which do not justify its high valuation metrics. Additionally, while Craftsman Auto has outperformed the Sensex with a year-to-date return of 27.15% compared to the Sensex's 4.05%, the elevated valuation suggests that the stock may be due for a correction. Overall, the current valuation does not align with the company's financial fundamentals, reinforcing the conclusion that Craftsman Auto is overvalued.
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