Is Aavas Financiers overvalued or undervalued?

As of 7 October 2025, Aavas Financiers has moved from a fair valuation to an expensive rating. The company is currently overvalued, with a PE ratio of 26.93, an EV to EBITDA of 16.05, and a PEG ratio of 1.71. In comparison, HUDCO, which is rated fair, has a PE of 16.66 and an EV to EBITDA of 13.91, while LIC Housing Finance, rated very attractive, shows a significantly lower PE of 5.67 and an EV to EBITDA of 11.18.
The valuation metrics indicate that Aavas Financiers is trading at a premium compared to its peers, suggesting that the market may have overestimated its growth potential. Additionally, the company has underperformed relative to the Sensex over the past year, with a stock return of -3.71% compared to the Sensex's 1.08% return, further reinforcing the notion that it is currently overvalued.