Is Waa Solar overvalued or undervalued?

As of 26 May 2025, Waa Solar's valuation grade has moved from very expensive to expensive, indicating a slight improvement in its perceived value. However, the company remains overvalued based on key financial metrics. The PE ratio stands at an exceptionally high 90.56, while the EV to EBITDA ratio is 17.72, and the ROE is a mere 0.67%. In comparison, peers like NTPC Ltd. have a PE ratio of 13.78 and an EV to EBITDA of 10.37, highlighting the significant disparity in valuation.
Given these ratios and the overall market context, Waa Solar is considered overvalued. The company's high PE ratio and low return metrics suggest that investors are paying a premium for its stock without corresponding returns. Additionally, while Waa Solar has outperformed the Sensex in the short term, with a 1-month return of 17.37% compared to the Sensex's 3.85%, the long-term performance has been disappointing, with a year-to-date decline of 31.3%. This further reinforces the notion that Waa Solar's current valuation does not align with its financial performance.