Is Banas Finance overvalued or undervalued?

As of 14 August 2025, the valuation grade for Banas Finance has moved from risky to very expensive, indicating a significant shift in its perceived value. The company is currently overvalued based on its financial ratios, with a PE ratio of -18.47, an EV to EBITDA of -3.69, and a ROCE of -21.89%. These figures suggest that the company is not generating sufficient returns relative to its capital employed, which raises concerns about its profitability.
In comparison to its peers, Banas Finance's valuation stands out unfavorably. For instance, Life Insurance has a PE ratio of 11.53 and an EV to EBITDA of 8.97, both of which are significantly more attractive than Banas Finance's metrics. Similarly, Bajaj Finance, while classified as very expensive, still maintains a PE ratio of 30.73, highlighting the disparity in valuation within the sector. The recent stock performance shows that Banas Finance has outperformed the Sensex over the past week and month, but its longer-term returns indicate a troubling trend, particularly with a 3-year return of -30.40% compared to the Sensex's 35.54%.