Is Novartis India overvalued or undervalued?

As of 31 October 2025, Novartis India has moved from a fair to an expensive valuation grade. The company is currently overvalued based on its financial ratios, with a PE ratio of 20.06, a negative EV to EBIT of -40.77, and a ROE of only 1.38%. In comparison to peers, Sun Pharma has a significantly higher PE ratio of 35.35, while Dr. Reddy's Labs presents a more attractive PE of 17.34, highlighting Novartis India's relative overvaluation.
The company's performance has been underwhelming, with a year-to-date return of -5.85%, contrasting sharply with the Sensex's gain of 7.42% during the same period. This trend, along with the negative capital employed reflected in the EV ratios, suggests that Novartis India is not only overvalued but also struggling to generate adequate returns compared to its peers in the pharmaceuticals and biotechnology sector.