Is City Union Bank overvalued or undervalued?

As of 5 September 2025, the valuation grade for City Union Bank has moved from fair to expensive, indicating a shift in its market perception. The bank is currently considered overvalued based on its financial metrics. Key ratios include a PE ratio of 12.71, a Price to Book Value of 1.56, and a PEG ratio of 1.20, which suggest that the stock may not be priced favorably compared to its earnings growth potential.
In comparison to its peers, City Union Bank's PE ratio is significantly lower than that of HDFC Bank at 21.33 and ICICI Bank at 20.48, both of which are also deemed expensive. Meanwhile, Axis Bank, categorized as attractive, has a PE ratio of 12.53, indicating that City Union Bank's valuation may not be justified in the current market context. Despite a strong year-to-date return of 15.79% compared to the Sensex's 3.29%, the overall valuation suggests that investors should be cautious, as the stock appears to be overvalued relative to its peers and financial performance.