Is Eicher Motors overvalued or undervalued?

As of 20 May 2025, Eicher Motors' valuation grade has moved from very expensive to expensive, indicating a slight improvement in its perceived value. The company is currently considered overvalued based on its financial metrics. Key ratios include a PE Ratio of 31.29, an EV to EBITDA of 31.30, and a Price to Book Value of 6.96, which are elevated compared to industry standards.
When compared to peers, Eicher Motors' PE Ratio is slightly lower than Bajaj Auto's 32.93 but significantly higher than Hero MotoCorp's attractive PE of 19.5. Additionally, Eicher's EV to EBITDA ratio is higher than both Bajaj Auto and TVS Motor Co., which stands at 58.64. Despite its strong returns, including a 12.01% YTD return compared to the Sensex's 5.66%, the current valuation suggests that Eicher Motors may not provide sufficient upside potential at its current price level.