Is Paul Merchants overvalued or undervalued?

As of 7 October 2025, the valuation grade for Paul Merchants has moved from expensive to very expensive. This indicates a significant shift in the company's perceived value, suggesting that it is currently overvalued. Key ratios highlight this assessment, with a PE ratio of 32.37, an EV to EBIT of 9.09, and a ROE of only 1.19%.
In comparison to its peers, Paul Merchants stands out with a higher PE ratio than Bajaj Finserv, which has a PE of 34.01, and significantly higher than Life Insurance, which boasts a PE of 11.85. The company's recent stock performance has been underwhelming, with a year-to-date return of -29.47%, contrasting sharply with the Sensex's positive return of 4.85% over the same period. Overall, these factors reinforce the conclusion that Paul Merchants is overvalued in its current market position.