Is HFCL overvalued or undervalued?

As of 4 November 2025, HFCL's valuation grade has moved from expensive to fair, indicating a shift in its perceived value. The company is currently fairly valued despite its high PE ratio of 398.76, which suggests it may be overvalued compared to traditional benchmarks. However, its Price to Book Value stands at a low 0.27, indicating potential undervaluation relative to its assets. Additionally, the EV to EBITDA ratio is 56.66, which is high, yet it reflects the company's current market positioning.
When compared to peers, HFCL's valuation metrics stand out. For instance, Indus Towers is considered expensive with a PE of 11.3 and an EV to EBITDA of 5.96, while ITI is categorized as risky with a PE ratio of -589.23, indicating it is loss-making. The significant disparity in these ratios suggests that HFCL, while high in some metrics, is not as overvalued as its peers in the telecom equipment sector. Recent stock performance shows HFCL has underperformed the Sensex year-to-date, with a return of -31.87% compared to the Sensex's 6.81%, reinforcing the notion that it is currently fairly valued amidst a challenging market environment.