Is Entero Healthcar overvalued or undervalued?

As of 20 June 2025, Entero Healthcare has moved from an attractive to a very attractive valuation grade. Despite this positive shift, the company appears to be overvalued based on its current financial metrics. The PE ratio stands at 51.31, significantly higher than peers such as TCS with a PE of 25.59 and Infosys at 25.22. Additionally, Entero's EV to EBITDA ratio is 28.76, which is also elevated compared to TCS's 17.89.
The PEG ratio for Entero is notably low at 0.36, suggesting potential growth, yet the overall valuation metrics indicate a premium that may not be justified. With a return on equity (ROE) of 5.50% and a return on capital employed (ROCE) of 7.86%, the company's performance does not align with its high valuation ratios. Furthermore, Entero's recent stock performance has lagged behind the Sensex, with a year-to-date decline of 20.8% compared to the Sensex's gain of 5.46%, reinforcing the notion that the stock may be overvalued.