Is Zydus Wellness overvalued or undervalued?

Sep 28 2025 08:01 AM IST
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As of September 26, 2025, Zydus Wellness is overvalued with a PE ratio of 47.60 and low ROCE and ROE, indicating its current price of 481.55 is excessive compared to its peers despite a strong YTD return.
As of 26 September 2025, Zydus Wellness has moved from a fair to an expensive valuation grade. The company is currently overvalued, with a PE ratio of 47.60, an EV to EBITDA ratio of 40.53, and a PEG ratio of 8.18. These ratios indicate a significant premium compared to its peers, such as Hindustan Unilever with a PE of 55.46 and Nestle India at 74.54, both categorized as very expensive.

The valuation metrics suggest that Zydus Wellness is not justified at its current price of 481.55, especially when considering its relatively low ROCE of 6.11% and ROE of 6.02%. While the company has outperformed the Sensex in the short term, with a YTD return of 23.97% compared to the Sensex's 2.93%, the overall valuation remains excessive in the context of its financial performance and peer comparisons.
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