Is Rane (Madras) overvalued or undervalued?

As of 11 July 2025, the valuation grade for Rane (Madras) has moved from fair to attractive, indicating a positive shift in its perceived value. The company is currently considered overvalued, primarily due to its high PE ratio of 167.41, which significantly exceeds the industry average. Additionally, the EV to EBITDA ratio stands at 14.37, while the PEG ratio is at 0.00, suggesting that despite the attractive grade, the company's valuation metrics are not aligned with its earnings growth potential.
In comparison to its peers, Rane (Madras) has a much higher PE ratio than Samvardhana Motherson, which is at 27.9, and Bosch, which is at 53.59, indicating that Rane is priced at a premium relative to these companies. Furthermore, while the company has shown strong returns over a longer horizon, its recent performance has lagged behind the Sensex, with a 1-year return of -3.97% compared to the Sensex's 3.26%. Overall, while the grade change suggests some improvement, the high valuation ratios indicate that Rane (Madras) is currently overvalued in the market.