Is Oriental Hotels overvalued or undervalued?

As of 2 June 2025, the valuation grade for Oriental Hotels has moved from fair to expensive, indicating that the company is overvalued. The current PE ratio stands at 71.51, significantly higher than the industry average, which suggests a premium valuation that may not be justified by its earnings growth. Additionally, the EV to EBITDA ratio is 27.05, further emphasizing the elevated valuation compared to peers.
In comparison to its industry peers, Oriental Hotels appears to be overvalued, particularly when considering its low ROE of 5.75% and ROCE of 8.99%. For instance, if we look at comparable companies in the Hotels & Resorts sector, their average PE ratios are likely lower, indicating that investors may be paying too much for Oriental Hotels' stock. Despite a strong performance over the long term, with a 5-year return of 578.88%, the recent trends show a decline in stock performance relative to the Sensex, which raises concerns about its current valuation.