Is Zydus Lifesci. overvalued or undervalued?

As of 20 May 2025, the valuation grade for Zydus Lifesciences has moved from fair to attractive, indicating a positive shift in its valuation outlook. The company is currently assessed as undervalued, supported by a PE ratio of 20.61, an EV to EBITDA ratio of 13.04, and a PEG ratio of 0.92, which suggests that the stock is priced favorably relative to its growth potential.
In comparison to its peers, Zydus Lifesciences stands out as attractive against Sun Pharma, which is considered expensive with a PE ratio of 35.25, and Divi's Lab, which is very expensive at a PE ratio of 79.33. Additionally, Zydus has a higher ROCE of 31.73% compared to Cipla's 22.99%, reinforcing its strong operational efficiency. While the stock has underperformed the Sensex over the past year, it has shown significant gains over a three and five-year period, indicating a robust long-term growth trajectory.