Is Reliance Power overvalued or undervalued?

As of 26 August 2025, the valuation grade for Reliance Power has moved from fair to attractive, indicating a more favorable outlook for the company. Based on the analysis, Reliance Power appears to be undervalued given its current metrics. The PE ratio is an outlier at -3581.79, while the Price to Book Value stands at 1.13, and the EV to EBITDA is at 16.16.
In comparison to peers, NTPC has a PE ratio of 13.49 and an EV to EBITDA of 10.66, while Tata Power Co. shows a PE of 29.23 and an EV to EBITDA of 11.94. These ratios suggest that Reliance Power is trading at a significant discount relative to its peers, reinforcing the conclusion that it is undervalued. Additionally, despite recent stock performance showing a decline over the past month, Reliance Power has outperformed the Sensex over the year with a return of 36.72% compared to the Sensex's -1.12%.