Is Modern Steels overvalued or undervalued?

As of 25 April 2023, the valuation grade for Modern Steels has moved from does not qualify to risky, indicating a shift in perception regarding its financial health. The company is currently assessed as undervalued, primarily due to its low PE ratio of 5.08 and a PEG ratio of 0.01, suggesting that the stock may be trading at a significant discount relative to its earnings growth potential. However, the negative EV to EBIT and EV to EBITDA ratios of -21.68 raise concerns about profitability and operational efficiency.
In comparison to its peers, Modern Steels' valuation metrics are starkly lower; for instance, JSW Steel has a PE ratio of 64.98, while Tata Steel boasts a PE of 51.92, both indicating a more favorable market perception. Despite its current undervaluation, Modern Steels has underperformed in the market with a year-to-date return of -11.32%, contrasting sharply with the Sensex's gain of 5.59%. This performance underscores the risks associated with investing in the company, despite its attractive valuation ratios.