Is Reliance Power overvalued or undervalued?

As of 10 October 2025, Reliance Power's valuation grade has moved from attractive to fair. The company appears to be overvalued based on its current financial metrics. Notably, the price-to-earnings (PE) ratio is an alarming -3889.95, indicating significant losses, while the price-to-book value stands at 1.23. Additionally, the EV to EBITDA ratio is 16.95, which is relatively high compared to peers.
In comparison to its industry peers, NTPC, which is rated attractive, has a PE ratio of 13.74 and an EV to EBITDA of 10.78, showcasing a more favorable valuation. Tata Power Co. also presents a more attractive profile with a PE of 30.17 and an EV to EBITDA of 12.21. Given these comparisons and the concerning ratios of Reliance Power, it is clear that the company is overvalued. Despite its recent stock performance outpacing the Sensex, with a year-to-date return of 14.19% compared to the Sensex's 5.58%, the underlying financials suggest caution.