Is Primo Chemicals overvalued or undervalued?

As of 9 June 2025, the valuation grade for Primo Chemicals has moved from very attractive to attractive. The company is currently considered overvalued based on its high valuation ratios, including a PE ratio of 174.41, an EV to EBITDA of 11.44, and a PEG ratio of 1.53. In comparison, its peers such as Godrej Industries, which has a PE ratio of 46.54 and an EV to EBITDA of 34.32, indicate a significant premium for Primo Chemicals.
Despite the attractive grade, the company's financial metrics suggest a cautionary stance, particularly with a return on capital employed (ROCE) of only 3.17% and a return on equity (ROE) of 0.93%. The recent stock performance has also been underwhelming, with a year-to-date decline of 30.98%, contrasting sharply with the Sensex's gain of 5.51% during the same period. Overall, these factors contribute to the conclusion that Primo Chemicals is overvalued in the current market environment.