Is HFCL overvalued or undervalued?

As of 23 May 2025, HFCL's valuation grade has moved from fair to expensive, indicating a shift in its market position. The company is currently overvalued based on its high PE ratio of 74.32, an EV to EBITDA of 31.30, and a Price to Book Value of 3.23. In comparison, peers such as Indus Towers have a significantly lower PE of 10.58 and EV to EBITDA of 5.93, while Affle 3i is also expensive with a PE of 66.35, highlighting HFCL's premium valuation relative to its industry.
Despite a strong performance in the short term, with a 1-month return of 24.93% compared to the Sensex's 3.88%, the long-term outlook appears less favorable, as evidenced by a year-to-date decline of 18.02% against the Sensex's gain of 5.63%. Overall, HFCL's current valuation metrics suggest it is overvalued in the context of its peers and market conditions.