Is Zenith Drugs overvalued or undervalued?

As of 20 August 2025, the valuation grade for Zenith Drugs has moved from expensive to very expensive, indicating a significant increase in perceived valuation. The company is currently considered overvalued based on its financial ratios, with a PE ratio of 18.17, a Price to Book Value of 2.09, and an EV to EBITDA of 10.70. These ratios suggest that the stock is trading at a premium compared to its earnings and book value.
In comparison to its peers, Zenith Drugs' valuation stands out unfavorably; for instance, Sun Pharma has a much higher PE ratio of 34.19, while Divi's Lab shows an even more extreme valuation with a PE of 69.13. Additionally, the PEG ratio for Zenith is notably low at 0.00, which raises concerns about future growth prospects relative to its current price. Despite a recent surge in stock price, outperforming the Sensex over the past week with a return of 19.83% compared to 1.75%, the overall valuation metrics suggest that Zenith Drugs is overvalued in the current market environment.