Is Ipca Labs overvalued or undervalued?

As of 12 August 2025, the valuation grade for Ipca Labs has moved from expensive to very expensive, indicating a significant shift in its perceived value. The company's current valuation suggests it is overvalued. Key ratios include a PE ratio of 39.58, an EV to EBITDA of 20.14, and a PEG ratio of 0.66, which, while showing some growth potential, still reflect a high valuation relative to earnings.
In comparison to its peers, Ipca Labs' PE ratio is notably higher than Sun Pharma's 33.93 and Cipla's 22.77, both of which are considered attractive or expensive, respectively. Additionally, while Ipca Labs has a ROCE of 18.44%, which is respectable, it does not justify the very expensive valuation when compared to peers like Dr. Reddy's Labs, which has a much lower PE ratio of 17.93 and is rated attractive. Recent stock performance shows that Ipca Labs has underperformed the Sensex, with a year-to-date return of -18.48% compared to the Sensex's 2.68%, reinforcing the view that the stock is overvalued.