Is Reliance Power overvalued or undervalued?

As of 10 October 2025, Reliance Power's valuation grade has moved from attractive to fair, indicating a shift in its perceived value. The company appears to be overvalued based on its current metrics, particularly with a PE ratio of -3889.95 and a ROE of -0.91%. In comparison, peers such as NTPC, which is rated attractive, has a PE ratio of 13.74, and Tata Power Co., also attractive, shows a PE of 30.17, highlighting the disparity in valuation.
Reliance Power's EV to EBITDA stands at 16.95, which is relatively high when compared to NTPC's 10.78. The company’s EV to Sales ratio of 4.59 further emphasizes its overvaluation relative to its peers. Despite a notable stock performance, with a YTD return of 14.19% compared to the Sensex's 5.58%, the underlying financial ratios suggest that Reliance Power is not positioned favorably in the current market landscape.