Is EIH overvalued or undervalued?

As of 10 March 2025, the valuation grade for EIH has moved from expensive to very expensive, indicating a significant shift in its perceived value. The company is currently overvalued, as evidenced by its high PE ratio of 30.82, a Price to Book Value of 5.08, and an EV to EBITDA ratio of 22.27. Compared to peers, EIH's PE ratio is notably lower than that of Indian Hotels Co, which stands at 66.81, and ITC Hotels at 65.26, both of which are also classified as very expensive.
Despite its strong ROCE of 23.06% and ROE of 16.48%, EIH's valuation metrics suggest that it is trading at a premium compared to its industry peers. The company's recent stock performance shows a 1-week return of 1.58%, slightly outperforming the Sensex's 1.40% return, but its year-to-date performance is concerning with a decline of 8.25% compared to the Sensex's gain of 5.59%. Overall, EIH appears to be overvalued in the current market context.