Is Rail Vikas overvalued or undervalued?

As of 20 June 2025, Rail Vikas has moved from expensive to very expensive in its valuation grade. The company is currently overvalued, with a PE ratio of 63.57, a Price to Book Value of 9.27, and an EV to EBITDA ratio of 73.33. These metrics significantly exceed those of its peers, such as Ircon International, which has a PE ratio of 25.53 and an EV to EBITDA of 20.92, indicating that Rail Vikas is trading at a premium compared to more reasonably valued companies in the construction sector.
The company's financial performance also reflects its overvaluation, with a ROCE of 11.54% and ROE of 15.33%, which, while respectable, do not justify the high valuation multiples. Additionally, Rail Vikas has underperformed against the Sensex in recent periods, with a year-to-date return of -7.56% compared to the Sensex's 5.46%. This further supports the conclusion that the stock is overvalued in the current market environment.