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 appears to be overvalued based on its current financial metrics. The PE ratio stands at 20.06, while the PEG ratio is at 0.91, indicating a relatively high price compared to its earnings growth potential. Additionally, the negative EV to EBIT and EV to EBITDA ratios of -40.77 and -39.92 respectively further suggest that the company's valuation is not justified by its earnings performance.
In comparison to peers, Novartis India’s valuation metrics are less favorable; for instance, Sun Pharma has a PE ratio of 35.35 and a PEG ratio of 4.03, while Cipla, which is rated attractive, has a PE ratio of 22.29. The significant divergence in these ratios indicates that Novartis India is not only overvalued relative to its peers but also struggling to deliver competitive returns, as evidenced by its year-to-date stock return of -5.85% compared to the Sensex's 7.42%.