Is Rail Vikas overvalued or undervalued?

As of 16 May 2025, Rail Vikas Nigam Ltd. has moved from an expensive to a very expensive valuation grade, indicating a significant increase in perceived overvaluation. The company is currently considered overvalued, with a PE ratio of 69.76, an EV to EBITDA ratio of 80.38, and a Price to Book Value of 10.17. These ratios suggest that the stock is trading at a premium compared to its earnings and book value.
In comparison to its peers, Rail Vikas stands out with a notably high PE ratio, while other companies in the sector exhibit lower valuations. For instance, if we consider similar firms, they typically have PE ratios significantly below 69.76, which reinforces the notion that Rail Vikas is overvalued. Additionally, the company's recent stock performance has outpaced the Sensex, with a 1-month return of 35.06% compared to the Sensex's 3.83%, but this strong performance does not mitigate the overvaluation concerns reflected in its financial ratios.