Is Strides Pharma overvalued or undervalued?

As of 7 February 2025, the valuation grade for Strides Pharma has moved from attractive to very attractive, indicating a significant improvement in its perceived value. The company is currently considered undervalued, supported by a PE ratio of 21.27, an EV to EBITDA of 10.79, and a PEG ratio of 0.04, which suggests strong growth potential relative to its price.
In comparison to its peers, Strides Pharma's valuation stands out favorably; for instance, Sun Pharma has a PE ratio of 35.25 and an EV to EBITDA of 24.91, while Cipla, considered attractive, has a PE of 22.99. Strides Pharma's strong return metrics, including a ROCE of 15.04% and a ROE of 13.42%, further reinforce its undervaluation narrative. Notably, the company has outperformed the Sensex significantly over the past year, with a stock return of 86.63% compared to the Sensex's 7.62%.