Is Galaxy Agrico overvalued or undervalued?

As of 12 November 2024, Galaxy Agrico's valuation grade has moved from does not qualify to risky, indicating a shift in perception regarding its investment potential. The company appears to be undervalued at its current price of 55.00, particularly when considering its PE ratio of 15.02, which is significantly lower than peers like Schaeffler India with a PE of 68.74 and Timken India at 55.53. Additionally, Galaxy Agrico's PEG ratio stands at an attractive 0.13, suggesting that the stock may be undervalued relative to its growth prospects.
In terms of financial health, Galaxy Agrico's ROE is 1.99%, and its EV to EBITDA ratio is 16.60, which aligns with the industry average but highlights the need for improvement in profitability given its negative ROCE of -2.86%. Compared to its peers, such as NRB Bearings, which has a PE of 19.9 and is classified as fair, Galaxy Agrico's valuation metrics suggest it is positioned favorably for potential upside. Notably, the company has outperformed the Sensex over the past year with a return of 20.09% compared to the Sensex's 7.57%, reinforcing the argument for its undervaluation.