Is AU Small Finance overvalued or undervalued?

As of 4 July 2025, the valuation grade for AU Small Finance has moved from expensive to very expensive, indicating a significant shift in its perceived market value. The company is currently considered overvalued. Key ratios include a PE Ratio of 28.95, a Price to Book Value of 3.58, and a PEG Ratio of 1.57.
In comparison to its peers, HDFC Bank has a PE Ratio of 22.65, while ICICI Bank stands at 21.8, both of which suggest that AU Small Finance is trading at a premium relative to these established banks. Additionally, the company's dividend yield is notably low at 0.24%, further emphasizing its high valuation. Recent stock performance shows AU Small Finance outperforming the Sensex over the past month, with a return of 12.95% compared to the Sensex's 3.01%, which may reflect investor optimism despite the overvaluation concerns.