Is Rane (Madras) overvalued or undervalued?

As of 8 July 2025, Rane (Madras) has moved from a fair to an attractive valuation grade, indicating a shift in its perceived investment potential. The company appears to be undervalued, especially when considering its high PE ratio of 171.33, an EV to EBITDA of 14.62, and a ROCE of 7.61%. In comparison, peers such as Samvardhana Motherson, which has a PE of 28.54 and an EV to EBITDA of 11.32, suggest that Rane (Madras) is trading at a significant premium relative to its industry counterparts.
The valuation metrics highlight notable discrepancies, particularly with the PEG ratio at 0.00, indicating that the stock may be undervalued relative to its growth prospects. While the stock has underperformed against the Sensex over the past year, with a return of -1.33% compared to the Sensex's 4.69%, its impressive long-term performance of 295.37% over five years suggests strong potential for recovery and growth. Overall, Rane (Madras) presents an attractive investment opportunity in the auto components sector.