Is Sharda Motor overvalued or undervalued?

As of 20 June 2025, Sharda Motor's valuation grade has moved from fair to attractive, indicating a positive shift in its market perception. The company is currently considered undervalued, supported by a PE ratio of 17.54, an EV to EBIT of 13.81, and a robust ROE of 29.66%. In comparison to peers, Samvardhana Motherson has a higher PE ratio of 27.81, while Bosch is deemed expensive with a PE of 47.3, highlighting Sharda Motor's relative affordability in the auto components sector.
Despite a recent decline in stock price, with a 1-week return of -3.46% compared to a 1.59% gain in the Sensex, Sharda Motor's long-term performance remains strong, evidenced by a 3-year return of 168.13%. This performance, coupled with its attractive valuation metrics, reinforces the conclusion that Sharda Motor is undervalued in the current market.