Is AU Small Finance overvalued or undervalued?

As of 7 July 2025, the valuation grade for AU Small Finance has moved from very expensive to expensive. Based on the current analysis, the company appears to be overvalued. Key ratios include a PE ratio of 28.66, a Price to Book Value of 3.54, and a PEG ratio of 1.56, which are relatively high compared to its peers.
In comparison, HDFC Bank has a PE ratio of 22.63 and ICICI Bank has a PE ratio of 21.68, both of which are lower than AU Small Finance's. Additionally, while the company's return on equity (ROE) stands at 12.36%, it is still below the industry average, indicating potential concerns regarding its profitability relative to its valuation. Although AU Small Finance has outperformed the Sensex on a year-to-date basis with a return of 45.14% compared to 6.79%, the current valuation metrics suggest that it may not be a favorable investment at this time.