Is Sundaram Clayton overvalued or undervalued?

As of 7 May 2025, the valuation grade for Sundaram Clayton has moved from very expensive to expensive, indicating a slight improvement in its perceived value. However, the company is still considered overvalued. Key ratios include a PE ratio of 52.86, an EV to EBIT ratio of 35.31, and a Price to Book Value of 3.42, all of which suggest that the stock is trading at a premium compared to its fundamentals.
In comparison to its peers, Sundaram Clayton's PE ratio is lower than Bharat Forge Ltd. at 59.98 but higher than CIE Automotive India Ltd., which is valued attractively with a PE of 21.15. The EV to EBITDA ratio of 20.92 for Sundaram Clayton also positions it unfavorably against the industry average, further supporting the conclusion of overvaluation. Despite a strong one-year stock return of 44.53%, the recent performance against the Sensex, particularly a YTD decline of 12.97%, raises concerns about its sustainability at current price levels.