Is Paul Merchants overvalued or undervalued?

As of 9 October 2025, the valuation grade for Paul Merchants has moved from very expensive to expensive, indicating a slight improvement in perceived value. However, the company remains overvalued based on its financial metrics. The current price-to-earnings (PE) ratio stands at 32.13, while the price-to-book value is notably low at 0.32, suggesting that the market is pricing the company's assets at a significant discount. Additionally, the enterprise value to EBITDA ratio is 7.40, which is relatively high compared to industry norms.
In comparison to its peers, Paul Merchants' PE ratio is lower than Bajaj Finance's 36.57 but higher than Life Insurance's attractive valuation of 11.62. The PEG ratio of 0.00 further emphasizes the lack of growth expectations from the market. Given these ratios and the overall market sentiment, Paul Merchants is assessed as overvalued, especially in light of its poor stock performance relative to the Sensex, where it has underperformed significantly over the past year with a decline of 26.01% compared to a slight increase in the Sensex.