Is Sona Machinery overvalued or undervalued?

As of 12 June 2025, Sona Machinery's valuation grade has moved from fair to attractive, indicating a positive shift in its perceived value. The company is currently considered undervalued, supported by a PE ratio of 29.66, an EV to EBIT of 15.78, and an EV to EBITDA of 11.16. In comparison to its peers, Sona Machinery's valuation stands out as more favorable, especially when contrasted with Thermax, which has a PE ratio of 66.81, and BEML Ltd, with a PE ratio of 59.69.
Despite the attractive valuation, Sona Machinery has experienced significant stock declines, with a year-to-date return of -31.83%, compared to a Sensex return of 5.26%. This discrepancy suggests that while the company may be undervalued based on its ratios, market sentiment has not yet aligned with its intrinsic value.