Is Maruti Sec. overvalued or undervalued?

As of 14 August 2025, the valuation grade for Maruti Sec. has moved from risky to does not qualify, indicating a significant shift in its assessment. The company appears to be overvalued based on its current financial metrics. The PE ratio stands at an alarming 1.89, while the EV to EBITDA ratio is also at 4.59, both of which are considerably low compared to industry standards. Additionally, the ROCE is extraordinarily high at 1301.00%, but this is misleading due to the negative book value reflected in the ROE.
In comparison to its peers, Maruti Sec. is positioned unfavorably. For instance, Life Insurance has a PE ratio of 11.53 and an EV to EBITDA of 8.97, which highlights the disparity in valuation. Similarly, Bajaj Finance, despite being categorized as very expensive, has a PE ratio of 30.73 and an EV to EBITDA of 17.64. Given these comparisons, Maruti Sec. is clearly overvalued in the current market landscape. Notably, the company's stock has significantly outperformed the Sensex over the past three years, with a return of 856.14%, which may not be sustainable given its current valuation metrics.