Is DCM Shriram overvalued or undervalued?

As of 1 July 2025, DCM Shriram's valuation grade has moved from very expensive to expensive, indicating a slight improvement in its valuation outlook. The company is currently considered overvalued based on its financial metrics. Key ratios include a PE ratio of 31.35, an EV to EBITDA of 15.40, and a PEG ratio of 0.89, which suggests that while the company has growth potential, its current price may not adequately reflect its earnings growth.
In comparison to its peers, DCM Shriram's PE ratio is significantly lower than that of Adani Enterprises at 73.27 and SRF at 75.81, both classified as very expensive. However, it is higher than Kirloskar Industries, which is rated very attractive with a PE of 31.2. Notably, DCM Shriram has outperformed the Sensex in various time frames, including a 1-year return of 20.88% compared to the Sensex's 5.31%, reinforcing the notion that while the stock has performed well, its current valuation may not be justified given the competitive landscape.