Is Zenith Drugs overvalued or undervalued?

As of 22 August 2025, the valuation grade for Zenith Drugs has moved from very expensive to expensive, indicating a slight improvement in its valuation outlook. The company is currently assessed as overvalued. Key ratios include a PE ratio of 17.48, an EV to EBITDA of 10.34, and a ROE of 11.51%.
In comparison to peers, Zenith Drugs has a lower PE ratio than Sun Pharma (34.36) and Divi's Lab (70.86), both categorized as expensive and very expensive respectively. However, it is also less attractive than companies like Dr. Reddy's Labs (PE of 18.76) and Cipla (PE of 23.83), which are rated as attractive. The recent stock performance shows a 1-week return of 13.53%, significantly outperforming the Sensex return of 0.97%, but the year-to-date performance is concerning with a decline of 9.65% compared to the Sensex's gain of 5.18%.