Is LGB Forge overvalued or undervalued?

As of 14 November 2022, the valuation grade for LGB Forge has moved from expensive to risky, indicating a significant shift in its financial outlook. The company appears to be overvalued based on its current metrics, with a PE ratio of -85.63, an EV to EBITDA ratio of 238.97, and a Price to Book Value of 15.82. These ratios suggest that the company's valuation does not align with its financial performance, particularly given the negative returns on equity (ROE) of -18.48% and return on capital employed (ROCE) of -3.59%.
In comparison to its peers, LGB Forge stands out with a notably high EV to EBITDA ratio, while its PE ratio is significantly negative, indicating potential financial distress. For instance, while LGB Forge's PE ratio is -85.63, other companies in the auto components industry typically exhibit positive PE ratios, suggesting that LGB Forge is not performing well relative to its competitors. Additionally, the company's recent stock performance has been lackluster, with a year-to-date return of -25.52% compared to the Sensex's gain of 5.62%, reinforcing the notion that LGB Forge is currently overvalued.