Is Thermax overvalued or undervalued?

As of 4 June 2025, the valuation grade for Thermax has moved from expensive to very expensive, indicating a significant shift in its perceived market value. The company is currently overvalued, with a PE ratio of 66.31, a Price to Book Value of 8.52, and an EV to EBITDA ratio of 45.24. These ratios suggest that the stock is trading at a premium compared to its earnings and book value.
In comparison to its peers, Thermax's valuation stands out as particularly high; for instance, its PE ratio of 66.31 is significantly above the industry average. Other competitors in the heavy electrical equipment sector are likely to have more favorable valuations, which raises concerns about Thermax's current pricing. Additionally, while the stock has shown strong returns over the long term, recent performance has lagged behind the Sensex, with a year-to-date decline of 13.43% compared to the Sensex's gain of 5.61%. This further supports the conclusion that Thermax is overvalued in the current market environment.