Is AU Small Finance overvalued or undervalued?

As of 3 July 2025, the valuation grade for AU Small Finance has moved from very expensive to expensive. The company is currently considered overvalued. Key ratios include a PE ratio of 28.70, a Price to Book Value of 3.55, and a PEG ratio of 1.56. In comparison to peers, HDFC Bank has a PE of 22.61 and ICICI Bank has a PE of 21.55, both indicating a more favorable valuation relative to AU Small Finance.
Despite a strong year-to-date stock return of 45.37% compared to the Sensex's 6.53%, the high valuation ratios suggest that the stock may not be a prudent investment at its current price of 811.30. The net NPA to Book Value stands at 4.64%, which further emphasizes the risks associated with the current valuation.