Is Gravity (India) overvalued or undervalued?

As of 14 November 2025, the valuation grade for Gravity (India) has moved from risky to does not qualify, indicating significant concerns regarding its financial health. The company is currently assessed as overvalued. Key ratios include a PE ratio of 3.90, an EV to EBIT of 8.61, and a ROE of 75.24%, which, while high, is overshadowed by a troubling ROCE of -72.94%.
In comparison to peers, Gravity (India) stands out with a notably low PE ratio compared to K P R Mill Ltd at 43.91 and Trident at 32.4, both of which are classified as very expensive and fair, respectively. The company's EV to Sales ratio of 0.41 further emphasizes its overvaluation when juxtaposed with industry standards. Despite a strong historical return of 546.15% over the past five years, recent performance has lagged behind the Sensex, with a 1-week return of -5.22% compared to the Sensex's 1.62% gain, reinforcing the valuation concerns.