Is Paul Merchants overvalued or undervalued?

As of 12 November 2025, the valuation grade for Paul Merchants has moved from very expensive to expensive. The company is currently considered overvalued based on its financial ratios. The PE ratio stands at 32.54, while the EV to EBITDA ratio is 7.50, and the ROE is a mere 1.19%. These figures indicate that the stock is trading at a premium compared to its earnings and returns on equity.
In comparison with peers, Paul Merchants' PE ratio is slightly lower than Bajaj Finance's 34.41 but higher than Life Insurance's attractive valuation of 11.14. Additionally, the EV to EBITDA ratio of 7.50 is significantly higher than that of Life Insurance, which stands at 9.18, suggesting that Paul Merchants may not be providing adequate value relative to its earnings potential. Notably, the company's stock has underperformed the Sensex over the year, with a return of -27.92% compared to the Sensex's 7.36%, reinforcing the view that it is overvalued in the current market context.