Is Zenith Drugs overvalued or undervalued?

As of 28 August 2025, the valuation grade for Zenith Drugs has moved from fair to expensive, indicating that the company is overvalued. The key ratios reflect this assessment, with a PE ratio of 16.96, an EV to EBITDA of 10.06, and a Price to Book Value of 1.95. Compared to peers, Zenith Drugs' valuation appears high, especially when contrasted with Sun Pharma, which has a PE ratio of 33.18, and Dr. Reddy's Labs, which stands at 18.52.
In the context of the broader market, Zenith Drugs has underperformed, with a year-to-date return of -12.38% compared to a positive 3.62% for the Sensex. This suggests that the market is not favorably viewing Zenith Drugs at its current price of 70.80, reinforcing the conclusion that it is overvalued relative to its peers and market performance.