Is Tech Mahindra overvalued or undervalued?

As of 17 June 2025, the valuation grade for Tech Mahindra has moved from expensive to very expensive. The company is currently overvalued based on its high valuation metrics. Key ratios include a PE ratio of 39.53, an EV to EBITDA of 23.36, and a Price to Book Value of 6.14, all of which are significantly elevated compared to its peers. For instance, TCS has a PE ratio of 26.2 and an EV to EBITDA of 18.32, while Infosys stands at a PE of 25.51 and an EV to EBITDA of 16.63, indicating that Tech Mahindra's valuation is not justified relative to these competitors.
Despite a strong return of 25.21% over the past year compared to the Sensex's 5.96%, the company's current valuation metrics suggest that it is priced for perfection, making it a risky investment at this stage. The PEG ratio of 0.50 does indicate growth potential, but when combined with the high PE and EV ratios, it reinforces the conclusion that Tech Mahindra is overvalued in the current market environment.