Is Tech Mahindra overvalued or undervalued?

As of 27 June 2025, Tech Mahindra's valuation grade has moved from very expensive to expensive, indicating a slight improvement in perceived value. The company is currently considered overvalued. Key ratios include a PE Ratio of 38.58, an EV to EBITDA of 22.78, and a PEG Ratio of 0.48, which suggests that while growth expectations are high, the current price may not be justified by earnings growth.
In comparison to its peers, Tech Mahindra's PE Ratio is significantly higher than TCS at 25.66 and Infosys at 25.02, both of which are considered more attractively valued. Additionally, while Tech Mahindra's ROCE stands at a strong 23.28%, the high valuation ratios raise concerns about sustainability. Notably, Tech Mahindra has outperformed the Sensex over the past year with a return of 16.97% compared to the Sensex's 6.08%, but this may not be enough to support its current valuation.