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 indicate that while the company has a reasonable earnings multiple, its valuation remains high relative to its peers.
In comparison to its industry peers, Zenith Drugs' PE Ratio is significantly lower than Sun Pharma's 34.36 and Divi's Lab's 70.86, both classified as expensive and very expensive, respectively. However, it is also higher than some attractive peers like Dr. Reddy's Labs, which has a PE of 18.76. The company's recent stock performance has been underwhelming, with a year-to-date return of -9.65%, contrasting sharply with the Sensex's gain of 5.18% during the same period, reinforcing the notion that Zenith Drugs is overvalued in the current market context.