Is Sun Retail overvalued or undervalued?

As of 28 October 2025, Sun Retail's valuation grade has moved from fair to expensive, indicating a shift in its perceived market value. The company is currently overvalued, with a PE ratio of 43.64, an EV to EBIT ratio of 12.06, and a ROE of only 0.96%. In comparison to its peers, Avenue Supermarts and Trent are also categorized as very expensive, with PE ratios of 100.46 and 106.06, respectively, highlighting the high valuation across the sector.
Despite the high PE ratio, Sun Retail's low Price to Book Value of 0.42 and a negligible ROCE of 0.51% suggest that the company is not generating sufficient returns relative to its valuation. Furthermore, the company's stock has underperformed significantly compared to the Sensex, with a year-to-date decline of 41.56% against an 8.30% gain for the index. This performance further reinforces the conclusion that Sun Retail is currently overvalued in the market.