Is Sobha overvalued or undervalued?

As of 28 July 2025, the valuation grade for Sobha has moved from very expensive to expensive, indicating a slight improvement in its perceived value. However, based on the current metrics, Sobha appears to be overvalued. The company has a PE ratio of 165.15, an EV to EBITDA ratio of 62.02, and a Price to Book Value of 3.70, all of which are significantly higher than its peers. For instance, DLF has a PE ratio of 41.71 and an EV to EBITDA of 92.11, while Lodha Developers shows a PE of 40.46 and an EV to EBITDA of 29.54, both of which suggest that Sobha's valuation is not justified when compared to these competitors.
Additionally, Sobha's ROCE stands at a mere 5.20% and ROE at 2.08%, further highlighting its inefficiencies relative to its high valuation. The stock has underperformed against the Sensex over the past year, with a return of -11.88% compared to the Sensex's -0.54%. This performance, combined with the elevated valuation ratios, reinforces the conclusion that Sobha is overvalued in the current market environment.