Is Sobha overvalued or undervalued?

As of 11 July 2025, Sobha's valuation grade has moved from very expensive to expensive, indicating a slight improvement in its perceived value. However, the company remains overvalued based on its current metrics. The PE ratio stands at an exceptionally high 168.80, while the EV to EBITDA ratio is 52.19, both of which are significantly above industry norms. Additionally, the PEG ratio is 2.23, suggesting that the stock is priced for growth that may not materialize.
In comparison to its peers, Sobha's valuation ratios are starkly higher than those of DLF, which has a PE of 43.19 and an EV to EBITDA of 95.38, and Macrotech Developers, with a PE of 50.65 and an EV to EBITDA of 36.26. These comparisons reinforce the notion that Sobha is overvalued in the current market. Furthermore, Sobha's recent stock performance has lagged behind the Sensex, with a year-to-date return of -4.71% compared to the Sensex's 5.58%, further indicating potential concerns about its valuation sustainability.