Is Kwality Pharma overvalued or undervalued?

As of 16 June 2025, the valuation grade for Kwality Pharma has moved from fair to expensive. The company is currently overvalued based on its financial metrics. Key ratios include a PE ratio of 28.30, an EV to EBITDA of 15.24, and a PEG ratio of 0.74, which suggests that while growth expectations are reasonable, the current price does not justify the valuation given the high PE ratio.
In comparison to its peers, Kwality Pharma's valuation appears steep. For instance, Sun Pharma has a PE ratio of 35.37, while Cipla, which is considered attractive, has a PE of 23.39. Additionally, Dr. Reddy's Labs, another attractive peer, has a significantly lower PE ratio of 19.87. Despite Kwality Pharma's strong stock performance, with a 1-year return of 101.89% compared to the Sensex's 6.24%, the current valuation suggests that investors may be paying a premium that does not align with its earnings potential.