Is Reliance Power overvalued or undervalued?

As of 1 October 2025, Reliance Power's valuation grade has moved from attractive to fair, indicating a shift in perceived value. The company appears to be overvalued given its current metrics, particularly highlighted by a staggering PE ratio of -3661.83, a Price to Book Value of 1.16, and an EV to EBITDA of 16.37. In comparison to peers, NTPC is rated attractive with a PE of 13.76 and an EV to EBITDA of 10.79, while Tata Power Co. also shows an attractive valuation at a PE of 30.24.
The overall assessment suggests that Reliance Power is overvalued, especially when considering its negative ROE of -0.91% and a low ROCE of 3.93%. While the stock has outperformed the Sensex over the longer term, with a 3-year return of 179.82% compared to the Sensex's 41.02%, the current valuation metrics do not support a favorable investment outlook at this time.