Is HPCL overvalued or undervalued?

As of 7 November 2025, HPCL's valuation grade has moved from fair to expensive, indicating a shift towards overvaluation. The company is currently assessed as overvalued based on its key ratios, including a PE ratio of 7.29, an EV to EBITDA of 6.44, and a PEG ratio of 0.03. These figures suggest that despite a reasonable price-to-book value of 1.99, the overall valuation metrics do not justify the current price level.
In comparison to its peers, HPCL's PE ratio is significantly lower than that of Reliance Industries, which stands at 24.07, and also lower than IOC's 9.81. Furthermore, while HPCL's dividend yield is a respectable 3.25%, its return on equity (ROE) of 13.17% does not compensate for the high valuation relative to its peers. Recent stock performance shows HPCL outperforming the Sensex over various periods, including a year-to-date return of 16.75% compared to the Sensex's 6.50%, but this does not alter the conclusion of overvaluation based on fundamental analysis.