Is R S Software (I) overvalued or undervalued?

As of 23 July 2025, R S Software (I) has moved from an attractive to a risky valuation grade. The company is currently overvalued, as indicated by its high PE ratio of 226.57 and an EV to EBITDA ratio of 47.46, which significantly exceed those of its peers. For comparison, TCS has a PE ratio of 23.35 and an EV to EBITDA of 16.47, while Infosys shows a PE of 24.48 and an EV to EBITDA of 15.94, highlighting the substantial premium at which R S Software is trading.
The company's financial metrics further reinforce the overvaluation stance, with a Price to Book Value of 3.95 and a PEG ratio of 0.00, indicating a lack of growth relative to its price. Additionally, despite a strong ROCE of 26.21% and ROE of 15.24%, these returns are overshadowed by the extreme valuation ratios. Notably, the stock has underperformed against the Sensex over the past year, with a return of -63.88% compared to the Sensex's 2.86%, further emphasizing the risk associated with investing in R S Software at its current price of 87.71.