Is Mehta Securities overvalued or undervalued?

As of 12 November 2024, Mehta Securities has moved from a grade of "does not qualify" to "risky." The company is currently overvalued based on its financial ratios, which include a PE ratio of -14.83, an EV to EBIT of -14.78, and a Price to Book Value of 2.75. These negative earnings ratios indicate significant financial distress, which is further underscored by a ROCE of -7.68% and a ROE of -1.86%.
In comparison to its peers, Mehta Securities stands out unfavorably. For instance, Life Insurance has a fair PE ratio of 12.54, while Bajaj Finance is categorized as very expensive with a PE of 35.01. The stark contrast in valuation metrics suggests that Mehta Securities is not only underperforming but also carries a higher risk profile. Despite a notable return of 79.56% over the past year compared to the Sensex's 7.61%, the underlying financial health raises concerns about its sustainability at the current price of 48.48.