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 include a PE ratio of 54.15, an EV to EBITDA of 36.72, and a Price to Book Value of 6.20, all of which suggest a premium valuation compared to its peers.
In comparison to its industry peers, Patanjali Foods' PE ratio is lower than Hindustan Unilever's 56.18 and Nestle India's 77.01, but still reflects a very high valuation within the sector. The PEG ratio of 0.78 indicates potential growth, yet the overall high multiples raise concerns about sustainability. Notably, Patanjali Foods has outperformed the Sensex in recent periods, with a 1-year return of 22.12% compared to the Sensex's 0.51%, but this performance does not mitigate the overvaluation risk.