Is Mehul Colours overvalued or undervalued?

As of 17 October 2025, the valuation grade for Mehul Colours has moved from expensive to very expensive, indicating a significant shift in its perceived market value. The company is currently overvalued, with a PE ratio of 16.68, an EV to EBIT ratio of 13.83, and an EV to EBITDA ratio of 13.13. These ratios suggest that the stock is trading at a premium compared to its earnings and cash flow generation capabilities.
In comparison with its peers, Sudarshan Chemicals is categorized as expensive with a PE ratio of 112.75, while Ultramarine Pigments is rated very attractive with a PE of 16.79. This highlights that Mehul Colours, despite being overvalued, is still more reasonably priced than some of its competitors. Additionally, the company's recent stock performance has lagged behind the Sensex, with a 1-week return of -2.07% compared to the Sensex's 1.76% gain, reinforcing the notion of its overvaluation in the current market environment.