Is AU Small Finance overvalued or undervalued?

As of 26 June 2025, the valuation grade for AU Small Finance has moved from expensive to very expensive. The company is currently overvalued based on its financial metrics. Key ratios include a PE ratio of 29.00, a Price to Book Value of 3.58, and a PEG ratio of 1.57, which indicate a premium valuation compared to its peers.
In comparison, HDFC Bank and ICICI Bank, both categorized as expensive, have PE ratios of 23.03 and 21.76, respectively, suggesting that AU Small Finance's valuation is significantly higher than these established players. Additionally, while the company has shown strong returns, with a year-to-date stock return of 46.87% compared to the Sensex's 7.19%, the elevated valuation metrics suggest that the stock may not be a prudent investment at current levels.