Is Indigo Paints overvalued or undervalued?

As of 8 August 2025, Indigo Paints' valuation grade has moved from very attractive to attractive, indicating a shift in market perception. The company appears to be overvalued at its current price of 1,154.85, especially when considering its PE ratio of 38.88 and EV to EBITDA ratio of 22.85, which are higher than those of its peers. For instance, Asian Paints, categorized as expensive, has a PE ratio of 61.63, while Kansai Nerolac, deemed attractive, has a significantly lower PE of 29.44.
In comparison to its peers, Indigo Paints' ROCE stands at 22.02%, which is commendable, but its PEG ratio of 0.00 suggests that the stock may not be growing at a rate that justifies its current valuation. Additionally, the stock has underperformed against the Sensex, with a year-to-date return of -17.94% compared to the Sensex's positive return of 2.20%. Overall, the combination of high valuation ratios and recent stock performance suggests that Indigo Paints is currently overvalued in the market.