Is Promax Power overvalued or undervalued?

As of 15 September 2025, the valuation grade for Promax Power has moved from very expensive to expensive, indicating a slight improvement in its perceived value. However, the company remains overvalued based on its financial metrics. The price-to-earnings (PE) ratio stands at 35.79, significantly higher than peers such as NTPC at 13.41 and Tata Power Co. at 30.06. Additionally, Promax Power's EV to EBITDA ratio is 19.76, which also exceeds the industry average.
Promax Power's current valuation suggests it is overvalued, particularly when compared to its peers. The company's return on equity (ROE) is 8.45%, which is relatively low compared to the industry standards, further supporting the overvaluation narrative. Despite a strong 1-week stock return of 24.07% compared to a 1.24% return for the Sensex, the year-to-date performance shows a decline of 24.33%, indicating potential underlying issues that investors should consider.