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 a significant deterioration in its investment appeal. The company is currently assessed as overvalued, particularly in light of its low PE ratio of 3.90 and a staggering ROCE of -72.94%. In comparison, peers such as K P R Mill Ltd, which is deemed very expensive with a PE ratio of 43.91, and Trident, categorized as fair with a PE of 32.4, highlight the disparity in valuation.
Gravity (India) exhibits an EV to EBITDA ratio of 8.61, which, while not excessively high, does not justify its current price given the company's financial performance. The PEG ratio of 0.03 further underscores the overvaluation, especially when compared to the industry average. Notably, despite a strong historical return of 546.15% over the past five years, the recent performance shows a decline of 5.22% over the past week, contrasting with the Sensex's gain of 1.62%, reinforcing the notion that the stock is currently overvalued.