Is Laurus Labs overvalued or undervalued?

As of 22 July 2025, Laurus Labs has moved from a valuation grade of very expensive to expensive. The company is currently considered overvalued based on its high valuation multiples, including a PE ratio of 123.72, an EV to EBIT ratio of 75.10, and an EV to EBITDA ratio of 44.49. These figures significantly exceed those of its peers, such as Sun Pharma with a PE of 35.23 and Divi's Lab with an EV to EBITDA of 58.14, indicating that Laurus Labs is trading at a premium compared to the industry.
The peer comparison highlights that while Laurus Labs is categorized as expensive, competitors like Cipla and Dr. Reddy's Labs are rated as attractive, with PE ratios of 22.44 and 18.31, respectively. This suggests that investors may find better value in these alternatives. Additionally, despite a strong performance relative to the Sensex over the past year, with a stock return of 81.77% compared to the Sensex's 2.09%, the high valuation multiples raise concerns about the sustainability of such growth.