Is H.M. Electro overvalued or undervalued?

As of 28 August 2025, H.M. Electro's valuation grade has moved from fair to expensive, indicating a shift in its perceived value. The company is currently overvalued based on its key financial ratios, including a price-to-earnings (PE) ratio of 10.42, an EV to EBIT ratio of 7.74, and an EV to EBITDA ratio of 7.67. These figures suggest that the stock is trading at a premium compared to its earnings and operational performance.
In comparison to its peers, H.M. Electro's PE ratio is significantly lower than that of Rail Vikas, which stands at 54.01, and Tube Investments, which has a PE ratio of 87.59, both categorized as expensive. Additionally, while H.M. Electro's return on capital employed (ROCE) is a robust 28.86%, the overall valuation metrics indicate that the stock is not justified at its current price of 63.50, especially considering its recent performance relative to the Sensex, where it has underperformed over the past month.