Is REC Ltd overvalued or undervalued?

As of 1 April 2025, the valuation grade for REC Ltd has moved from attractive to very attractive, indicating a significant improvement in its perceived value. The company is currently considered undervalued. Key ratios supporting this assessment include a PE ratio of 6.88, a Price to Book Value of 1.40, and a PEG ratio of 0.56, all of which suggest that the stock is trading at a lower valuation compared to its earnings growth potential.
In comparison to its peers, REC Ltd stands out with a much lower PE ratio than Life Insurance at 12.54 and Bajaj Finance at 35.01, which are categorized as fair and very expensive, respectively. Additionally, REC Ltd's EV to EBITDA ratio of 11.13 is competitive, especially when compared to Life Insurance's 9.89. Despite a recent decline in stock performance year-to-date, REC Ltd has shown impressive returns over the longer term, outperforming the Sensex significantly over the 3-year and 5-year periods.