Is Avasara Finance overvalued or undervalued?

As of 10 October 2025, Avasara Finance's valuation grade has moved from risky to does not qualify, indicating a significant deterioration in its financial standing. The company is currently assessed as overvalued given its negative PE ratio of -12.83, an EV to EBIT of -12.82, and a ROE of -9.95%. These metrics suggest that the company is struggling to generate profits and is not performing well relative to its equity.
In comparison to its peers, Avasara Finance's ratios starkly contrast with those of Bajaj Finance, which has a PE ratio of 36.56, and Life Insurance, with a more attractive PE of 11.65. The negative earnings ratios and high price-to-book value of 6.38 further reinforce the notion that Avasara Finance is overvalued in the current market. Additionally, the company's recent stock performance has lagged behind the Sensex, with a 1-year return of -17.63% compared to the Sensex's 1.09%, further highlighting its underperformance.