Is Paul Merchants overvalued or undervalued?

As of 27 June 2025, the valuation grade for Paul Merchants has moved from very expensive to expensive, indicating a slight improvement in its valuation outlook. The company is currently considered overvalued. Key ratios include a PE ratio of 10.73, an EV to EBIT of 3.97, and an EV to Sales of 0.06, which suggest that while the company is generating some earnings, its valuation relative to its sales is extremely low.
In comparison to its peers, Paul Merchants has a PE ratio lower than Life Insurance at 12.53 and significantly lower than Bajaj Finance, which stands at 35.35. The PEG ratio for Paul Merchants is 0.00, indicating that the stock may not be growing in line with its earnings, further reinforcing the overvaluation stance. Additionally, the company's stock has underperformed relative to the Sensex over the past year, with a return of -9.56% compared to the Sensex's 6.08%, highlighting potential concerns regarding its market performance.