Is Indigo Paints overvalued or undervalued?

As of 8 August 2025, Indigo Paints has moved from a very attractive to an attractive valuation grade. The company is currently assessed as overvalued given its high PE ratio of 38.88, an EV to EBITDA of 22.85, and a Price to Book Value of 5.34. In comparison, its peers show a significant disparity; for instance, Asian Paints has a PE ratio of 61.63, while Kansai Nerolac, which is also rated attractive, has a much lower PE of 29.44.
Despite Indigo Paints' strong ROCE of 22.02% and ROE of 13.76%, the current valuation metrics suggest that the stock is priced higher than its intrinsic value. Recent performance indicates a decline, with a year-to-date return of -17.94%, contrasting with a modest gain of 2.20% in the Sensex. This further reinforces the view that Indigo Paints is currently overvalued in the market.