Is Entero Healthcar overvalued or undervalued?

As of 1 July 2025, Entero Healthcare's valuation grade has moved from very attractive to attractive, indicating a shift in perception regarding its investment potential. The company is currently assessed as overvalued, primarily due to its high PE ratio of 52.30 and EV to EBITDA ratio of 29.30, which significantly exceed those of its peers. For instance, TCS has a PE ratio of 25.56 and an EV to EBITDA of 17.86, while Infosys shows a PE of 25.01 and an EV to EBITDA of 16.3, highlighting the premium at which Entero is trading compared to these established competitors.
In addition, Entero's PEG ratio stands at a low 0.37, suggesting that while the stock may be priced high relative to earnings, its growth prospects are not reflected in the current valuation. The company's return on capital employed (ROCE) is 7.86%, and return on equity (ROE) is 5.50%, which are relatively modest compared to the high valuation metrics. Notably, Entero's stock has underperformed the Sensex year-to-date, with a decline of 19.27% compared to the Sensex's gain of 7.11%, further supporting the view that the stock may be overvalued in the current market context.