Is Effwa Infra overvalued or undervalued?

As of 13 November 2025, Effwa Infra's valuation grade has moved from fair to expensive, indicating a shift in its market perception. The company is currently considered overvalued based on its key financial ratios. The PE ratio stands at 28.66, while the EV to EBITDA ratio is 19.32, both of which are significantly higher than many of its peers. For instance, Rail Vikas has a PE ratio of 57.69 and an EV to EBITDA of 72.83, while Ircon International, which is rated fair, has a PE ratio of 25.26 and an EV to EBITDA of 19.44.
Effwa Infra's ROCE is a strong 30.24%, and its ROE is 21.19%, suggesting good profitability; however, these figures do not justify the high valuation multiples it commands. The stock has shown a strong performance in the short term, with a 1-month return of 18.18% compared to the Sensex's 2.58%, but its year-to-date performance is lagging behind the Sensex at -0.44%. Overall, the combination of high valuation ratios and the recent downgrade in valuation grade suggests that Effwa Infra is overvalued in the current market environment.