Is Reliance Power overvalued or undervalued?

Oct 12 2025 08:07 AM IST
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As of October 10, 2025, Reliance Power's valuation has shifted from attractive to fair, being considered overvalued due to an extremely high PE ratio of -3889.95 and an EV to EBITDA of 16.95, despite outperforming the Sensex with a year-to-date return of 14.19%.
As of 10 October 2025, Reliance Power's valuation grade has moved from attractive to fair. The company is currently considered overvalued, primarily due to its extraordinarily high PE ratio of -3889.95, which is a significant outlier compared to its peers. Additionally, its EV to EBITDA stands at 16.95, while the industry average for comparable companies like NTPC is 10.78, indicating a premium valuation.

In terms of key ratios, Reliance Power has a Price to Book Value of 1.23 and a ROCE of 3.93%. When compared to peers, NTPC, which is rated attractive, has a PE of 13.74, and Tata Power Co. is also attractive with a PE of 30.17. The recent stock performance shows that Reliance Power has outperformed the Sensex with a year-to-date return of 14.19% compared to the Sensex's 5.58%, but this does not mitigate the concerns regarding its valuation metrics.
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