Is Aavas Financiers overvalued or undervalued?

As of 12 November 2025, Aavas Financiers has moved from an expensive to a very expensive valuation grade. The company is currently overvalued, with a PE ratio of 27.50, an EV to EBITDA of 16.24, and a PEG ratio of 2.10. In comparison to its peers, HUDCO has a significantly lower PE ratio of 16.18 and an EV to EBITDA of 15.01, while LIC Housing Finance is valued attractively with a PE of 5.71 and an EV to EBITDA of 11.22. The high valuation metrics suggest that Aavas Financiers is not only overvalued compared to its peers but also reflects a market sentiment that may not be sustainable. Additionally, the company's stock has underperformed relative to the Sensex over the longer term, particularly in the 3-year and 5-year periods, indicating potential concerns about its future growth prospects.