Is DCM Shriram overvalued or undervalued?

As of 16 May 2025, DCM Shriram's valuation grade has moved from expensive to very expensive, indicating a significant shift in its perceived value. The company is currently overvalued, with a PE ratio of 27.44, an EV to EBITDA of 13.62, and a PEG ratio of 0.78. In comparison, peers such as Adani Enterprises and SRF are also categorized as expensive or very expensive, with PE ratios of 70.92 and 73.81, respectively, highlighting that DCM Shriram's valuation is not an outlier but rather part of a broader trend in the industry.
Despite its strong historical performance, including a 5-year return of 261.21% compared to the Sensex's 143.07%, the current valuation metrics suggest that investors may be paying a premium for future growth that may not materialize. Given these factors, DCM Shriram is positioned as overvalued in the current market context.