Is Tarmat overvalued or undervalued?

As of 29 September 2025, Tarmat's valuation grade has moved from fair to expensive, indicating a shift in its market perception. The company is currently overvalued, with a PE ratio of 60.33, an EV to EBITDA of 40.87, and a PEG ratio of 1.31, which suggests that investors are paying a premium for its earnings growth potential. In comparison, peers such as Larsen & Toubro, which is fairly valued with a PE ratio of 32.71, and IRB Infrastructure, categorized as expensive with a PE ratio of 29.55, highlight Tarmat's relative overvaluation.
The company's financial metrics further reinforce this assessment, as it shows a low ROCE of 0.92% and ROE of 1.19%, indicating inefficiencies in generating returns on capital and equity. Additionally, Tarmat's recent stock performance has been poor, with a year-to-date return of -34.75%, contrasting sharply with the Sensex's gain of 2.85% during the same period. This underperformance, combined with its high valuation ratios, suggests that Tarmat may not be an attractive investment at its current price of 50.39.