Is Zenith Drugs overvalued or undervalued?

As of 26 August 2025, the valuation grade for Zenith Drugs has moved from expensive to fair, indicating a more favorable assessment of its market position. The company is currently fairly valued, with a PE Ratio of 16.42, an EV to EBITDA of 9.78, and a Price to Book Value of 1.89. These ratios suggest that Zenith Drugs is positioned competitively within its industry.
In comparison with peers, Zenith Drugs' PE Ratio is significantly lower than that of Sun Pharma (33.48) and Divi's Lab (71.33), both categorized as expensive, while it is on par with Alkem Lab, which also holds a fair valuation at a PE of 28.37. Notably, the company's ROCE stands at 13.71%, which reflects efficient capital utilization, further supporting its fair valuation status. Despite recent stock performance trailing behind the Sensex, with a year-to-date decline of 14.67% compared to the Sensex's gain of 4.51%, the current valuation metrics suggest that Zenith Drugs presents a reasonable investment opportunity at its current price of 68.95.