Is Promax Power overvalued or undervalued?

As of 12 September 2025, the valuation grade for Promax Power has moved from expensive to very expensive, indicating a significant increase in perceived overvaluation. The company is currently considered overvalued based on its financial metrics, with a PE ratio of 35.79, an EV to EBITDA ratio of 19.76, and a Price to Book Value of 3.02. These ratios are notably higher than those of its peers, such as NTPC, which has a PE ratio of 13.43 and an EV to EBITDA of 10.64, and Tata Power Co., with a PE ratio of 29.85 and an EV to EBITDA of 12.12.
The comparison with peers highlights that Promax Power's valuation is not justified given its financial performance, particularly with a ROE of 8.45% and a ROCE of 12.92%. The stock has shown strong short-term performance, with a 1-week return of 24.07% compared to the Sensex's 1.48%, but its year-to-date return of -24.33% suggests underlying weaknesses. Overall, Promax Power appears to be overvalued in the current market context.