Is Syschem (India) overvalued or undervalued?

As of 5 February 2025, the valuation grade for Syschem (India) has moved from fair to very expensive. The company is currently overvalued, as indicated by its high PE ratio of 206.69, an EV to EBIT of 198.59, and an EV to EBITDA of 51.39. These ratios suggest that the stock is trading at a significant premium compared to its earnings and cash flows.
In comparison to its peers, Syschem's valuation appears excessive, especially when looking at Solar Industries with a PE of 123.77 and an EV to EBITDA of 76.22, and Godrej Industries, which is considered attractive with a PE of 46.63 and an EV to EBITDA of 34.36. The stark contrast in these ratios highlights Syschem's overvaluation in the context of its industry. Additionally, while Syschem has shown strong returns over the past five years, its recent performance has lagged behind the Sensex, with a year-to-date return of -2.93% compared to the Sensex's 5.59%.