Is HBL Engineering overvalued or undervalued?

As of 31 July 2023, HBL Engineering's valuation grade has moved from expensive to very expensive, indicating a significant increase in perceived overvaluation. The company is currently deemed overvalued, with a PE ratio of 60.58, a Price to Book Value of 11.34, and an EV to EBITDA ratio of 42.52. In comparison, peers such as Exide Industries and High Energy Batteries also fall into the very expensive category, with PE ratios of 42.02 and 41.15, respectively, highlighting that HBL Engineering's valuation is considerably higher than its industry counterparts.
Despite a strong return of 28.64% over the past year compared to the Sensex's 7.62%, the company's high valuation ratios suggest that it may not sustain such performance moving forward. The PEG ratio stands at 0.00, indicating no growth expectations priced in, which further emphasizes the risk of overvaluation. Overall, HBL Engineering appears to be significantly overvalued in the current market environment.