Is ARC Finance overvalued or undervalued?

As of 16 June 2025, the valuation grade for ARC Finance has moved from fair to attractive, indicating a positive shift in its market perception. The company is currently assessed as undervalued, particularly when considering its key financial ratios. The PE ratio stands at 26.12, while the EV to EBITDA ratio is 14.23, and the PEG ratio is notably low at 0.03, suggesting strong growth potential relative to its price.
In comparison to its peers, ARC Finance's PE ratio is higher than Life Insurance, which has a PE of 12.42, but significantly lower than Bajaj Finance's PE of 35.03, indicating that while it is relatively valued, it remains attractive in the context of its growth prospects. The company's recent stock performance has been volatile, with a YTD return of -11.68%, contrasting with the Sensex's positive return of 4.68%, which may suggest a temporary market mispricing. Overall, ARC Finance appears to be a compelling investment opportunity given its attractive valuation metrics.