Is Prakash Steelage overvalued or undervalued?

As of 27 May 2025, the valuation grade for Prakash Steelage has moved from risky to expensive, indicating a shift in perception regarding its market value. The company is currently considered overvalued, with a PE ratio of 86.15, an EV to EBITDA of 73.77, and a Price to Book Value of 13.88. These ratios suggest that the stock is trading at a premium compared to its earnings and book value.
In comparison to its peers, Prakash Steelage's PE ratio is significantly higher than Optiemus Infra's 82.35 and PTC India's very attractive 9.02, which highlights the overvaluation concern. Additionally, while the company has a ROE of 16.11%, its low ROCE of 0.63% raises questions about its efficiency in generating returns. Notably, over the past year, Prakash Steelage has underperformed the Sensex, with a return of -21.62% compared to the Sensex's 7.62%, reinforcing the view that the stock may be overvalued in the current market environment.