Is Simplex Mills overvalued or undervalued?

As of 11 January 2024, the valuation grade for Simplex Mills has moved from does not qualify to risky, indicating a significant shift in its financial standing. The company is currently considered overvalued, as evidenced by its negative PE ratio of -14.43, a price-to-book value of -4.15, and an EV to EBITDA ratio of -16.98. These ratios suggest that the company is not generating positive earnings or cash flow, which raises concerns about its financial health.
In comparison to its peers, Simplex Mills stands out with a notably low PE ratio, while K P R Mill Ltd is classified as very expensive with a PE of 47.51, and Trident is deemed fair with a PE of 42.6. The stark contrast in valuations highlights the challenges Simplex Mills faces within the garments and apparel industry. Despite these valuation concerns, the company's stock has outperformed the Sensex in various time frames, including a 29.98% return over the past year compared to the Sensex's 7.58%, which may suggest some investor optimism despite the underlying financial issues.