Is Prabha Energy overvalued or undervalued?

As of 20 March 2025, the valuation grade for Prabha Energy has moved from does not qualify to risky, indicating a significant deterioration in its perceived financial health. The company is currently overvalued, with a PE ratio of -1971.44, an EV to EBITDA ratio of -1601.58, and a Price to Book Value of 6.53. These ratios highlight severe financial distress, particularly the negative earnings multiples, which suggest that the market has little confidence in the company's ability to generate profits.
In comparison to its peers, Prabha Energy stands out unfavorably; for instance, NTPC Ltd. has a PE ratio of 13.78 and an EV to EBITDA of 10.37, while Tata Power Co., Ltd. shows a PE of 31.57 and an EV to EBITDA of 12.92. This stark contrast underscores the overvaluation of Prabha Energy, especially given its negative return metrics and the lack of dividend yield. Recent stock performance shows a decline of 0.48% over the past week, while the Sensex has gained 1.36%, further reinforcing the notion that Prabha Energy is not aligned with broader market trends.