Is Aavas Financiers overvalued or undervalued?
As of July 1, 2025, Aavas Financiers is considered overvalued with a PE ratio of 33.01 and an expensive valuation grade, despite a strong year-to-date return of 22.04%, as its metrics do not justify its premium compared to peers like HUDCO and LIC Housing Finance.
As of 1 July 2025, Aavas Financiers has moved from a valuation grade of very expensive to expensive. The company is currently considered overvalued. Key ratios include a PE ratio of 33.01, an EV to EBIT of 18.47, and a Price to Book Value of 4.29. In comparison to peers, HUDCO has a PE ratio of 17.78 and LIC Housing Finance has a significantly lower PE of 6.18, indicating that Aavas is trading at a premium relative to its competitors.Despite recent stock performance showing a 22.04% year-to-date return compared to the Sensex's 7.11%, the elevated valuation metrics suggest that Aavas Financiers may not justify its current price levels. The company’s ROE stands at 13.00%, which, while respectable, does not sufficiently support its high valuation in light of peer comparisons.
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