Is Patanjali Foods overvalued or undervalued?

As of 18 July 2025, the valuation grade for Patanjali Foods has moved from expensive to very expensive, indicating a significant shift in its market perception. The company is currently considered overvalued. Key ratios highlight this valuation concern, with a PE ratio of 54.15, an EV to EBITDA of 36.72, and a Price to Book Value of 6.20.
In comparison to its peers, Patanjali Foods' PE ratio is lower than Hindustan Unilever's 56.18 and Nestle India's 77.01, but still reflects a premium valuation in the sector. The PEG ratio of 0.78 suggests that while growth expectations may be favorable, the current price does not adequately reflect the underlying earnings potential. Additionally, despite strong recent stock performance, outperforming the Sensex with a 1Y return of 22.12% compared to the Sensex's 0.51%, the overall valuation metrics suggest that the stock may not be justified at its current price level.