Is Aavas Financiers overvalued or undervalued?

As of 26 September 2025, Aavas Financiers' valuation grade has moved from very expensive to expensive, indicating a slight shift in perception but still reflecting a high valuation. The company is currently considered overvalued. Key ratios include a PE ratio of 25.43, an EV to EBITDA of 15.56, and a ROE of 13.00%. In comparison to its peers, Aavas Financiers has a higher PE ratio than HUDCO, which stands at 15.83, and significantly exceeds LIC Housing Finance's attractive PE of 5.62. This suggests that Aavas is priced at a premium relative to its competitors. Additionally, the company's stock has underperformed against the Sensex over various time frames, notably with a 1-year return of -16.33% compared to the Sensex's -6.30%, reinforcing the view of overvaluation.