Is DCM Shriram overvalued or undervalued?

As of 3 July 2025, the valuation grade for DCM Shriram has moved from expensive to very expensive. This indicates that the company is currently overvalued. Key ratios include a PE ratio of 36.73, an EV to EBITDA of 17.84, and a PEG ratio of 1.04. When compared to peers, DCM Shriram's PE ratio is significantly lower than that of Adani Enterprises at 72.98 and SRF at 76.62, both categorized as very expensive, highlighting its relative valuation within the industry.
Despite its strong recent performance, with a 1-year stock return of 40.55% compared to a Sensex return of 4.07%, the elevated valuation metrics suggest that DCM Shriram may not offer attractive investment potential at current price levels. The combination of high valuation ratios and the recent grade change reinforces the conclusion that the stock is overvalued.