Is Zenith Drugs overvalued or undervalued?

As of 22 August 2025, Zenith Drugs has moved from a valuation grade of very expensive to expensive. The company is currently considered overvalued based on its financial ratios and peer comparisons. Key ratios include a PE ratio of 17.48, an EV to EBITDA of 10.34, and a Price to Book Value of 2.01, which suggest that the stock is trading at a premium compared to its earnings and book value.
In comparison to its peers, Zenith Drugs' PE ratio of 17.48 is significantly lower than that of Sun Pharma Industries at 34.36 and Divi's Lab at 70.86, both of which are classified as expensive and very expensive, respectively. This indicates that while Zenith Drugs is overvalued, it is relatively more attractive than some of its higher-valued peers. Furthermore, the company's recent stock performance has lagged behind the Sensex, with a year-to-date return of -9.65% compared to the Sensex's 5.18%, reinforcing the notion that the stock may not be a favorable investment at its current price of 73.00.