Is Safa Systems overvalued or undervalued?

As of 13 October 2025, the valuation grade for Safa Systems has moved from risky to very expensive, indicating a significant shift in its perceived value. The company is currently overvalued, with a PE ratio of 59.53, an EV to EBIT of 29.93, and an EV to EBITDA of 29.29. These ratios suggest that the stock is trading at a premium compared to its earnings and cash flow generation capabilities.
In comparison to its peers, Safa Systems stands out with a notably high PE ratio, while TCS and Infosys, which are valued at 21.63 and 22.75 respectively, present a stark contrast in valuation. Additionally, the PEG ratio for Safa is 0.00, indicating a lack of growth expectations, which further supports the notion of overvaluation. Despite a remarkable year-to-date return of 192.65% compared to the Sensex's 5.36%, the current valuation metrics suggest that investors should exercise caution before considering further investment in Safa Systems.