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Most Overvalued Stocks in India

Overvalued stocks are usually stocks in which investors have high expectations. These stocks usually trade at high PE and PB ratios and offer low dividend yields.

They are often very popular stocks in the market. They don't offer much margin of safety as most investors are interested in buying them. Overvalued stocks can decline sharply if there is any kind of disappointment with the company's performance.

Marketcap: Largecap
Price / Sales
(Rs m)
(Latest, %)
(Curr FY, x)
BAJAJ HOLDINGS & INVESTMENT7,828.3297.01.8187.7871,23311.0%0.0
ADANI GREEN ENERGY 1,768.1233.834.935.92,800,64916.5%9.2
ADANI TOTAL GAS914.0170.529.724.71,005,22618.6%0.5
AVENUE SUPERMARTS 4,685.0125.316.67.93,048,65214.8%0.0
ABB INDIA6,288.8106.822.712.81,332,63921.0%0.0
BHARTI AIRTEL1,,824,93215.9%2.1
ADANI TRANSMISSION1,041.392.89.58.71,161,50711.0%2.9
ADANI ENTERPRISES3,026.892.08.92.53,450,4986.7%1.2
VARUN BEVERAGES1,396.386.326.211.51,814,29230.3%0.7
PIDILITE INDUSTRIES2,830.,439,44118.0%0.0
HDFC LIFE INSURANCE602.482.39.20.01,295,62110.5%0.1
HAVELLS INDIA1,500.779.613.05.6940,46316.2%0.0
TATA CONSUMER1,136.978.66.67.91,083,2788.3%0.1
SBI LIFE INSURANCE 1,446.777.910.10.01,448,82013.3%0.0
DIVIS LABORATORIES3,674.270.57.612.6975,37114.3%0.0
MACROTECH DEVELOPERS1,171.368.57.212.31,164,8073.9%0.7
GODREJ CONSUMER1,168.366.97.99.01,194,91012.4%0.1
JSW ENERGY625.262.04.410.61,092,7058.0%1.3
MANKIND PHARMA2,345.153.910.810.7939,40017.6%0.0

* We show NM where the values are negative

Disclaimer: This is for information purposes only. These are not stock recommendations and should not be treated as such. Learn more about our recommendation services here... Also note that these screeners are based only on numbers. There is no screening for management quality.

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Which are the most overvalued stocks in India right now?

As per Equitymaster's Stock Screener, here are the list of the most overvalued stocks in India right now...

These companies have been ranked as per their PE (Price to Earnings) ratio and PB (Price to Book Value) ratio. The higher the ratios, the more overvalued the stock is.

Of course, there are other parameters you should take into account before forming a hard opinion on the stock valuation.

How do you know if a stock is overvalued?

One of the quickest ways to gauge whether a stock is overvalued is to compare its valuation ratios to the rest of its industry or its historical average. If it is trading above these numbers, it is likely to be overvalued.

Some of the most commonly used valuation ratios are the Price to Earnings ratio, Price to Book Value ratio and Price to Sales ratio.

How do you find overvalued stocks?

The first step to identifying overvalued stocks is to use a stock screener. A stock screener is a set of tools that allow investors to quickly sort through a large number of companies according to a few pre-defined criteria.

Some of the filters you can use to find overvalued stocks are the Price to Earnings ratio and the Price to Book Value ratio. The higher the number, the more overvalued the stock.

Are overvalued stocks a good investment?

An overvalued stock may be a good investment if the company has a strong future outlook and is expected to grow earnings rapidly.

However, usually it is not wise to buy overvalued stocks since they don't offer much margin of safety.

Do overvalued stocks always go down?

Not always. Growth stocks are a great example of overvalued stocks that go up in value.

These stocks generally appear overvalued because of their high price-to-earnings (P/E) ratios. Investors expect to earn substantial capital gains as a result of strong growth in the underlying company.

However, in most cases, overvaluation acts as a drag on returns. So, there is a period of low returns until a fair valuation is attained.

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