Is Tatva Chintan overvalued or undervalued?

As of 18 August 2021, the valuation grade for Tatva Chintan moved from does not qualify to very expensive, indicating a significant shift in its perceived market value. The company is currently assessed as overvalued, with a PE ratio of 379.10, an EV to EBITDA ratio of 64.04, and a Price to Book Value of 2.94. These ratios suggest that the stock is trading at a premium compared to its earnings and book value, raising concerns about its sustainability at such high valuations.
In comparison to its peers, Tatva Chintan's valuation appears excessive, particularly when contrasted with Solar Industries India Ltd., which has a PE ratio of 123.77, and Godrej Industries Ltd., which is valued at a much more reasonable PE of 46.63. The stark differences in these ratios highlight the relative overvaluation of Tatva Chintan within the specialty chemicals sector. Furthermore, while the company has outperformed the Sensex in the short term, with a 1-month return of 30.59% compared to the Sensex's 3.81%, its long-term performance has been lackluster, with a 3-year return of -59.09%. This discrepancy reinforces the conclusion that Tatva Chintan is currently overvalued.