Is Dhanlaxmi Bank overvalued or undervalued?

As of 4 August 2025, Dhanlaxmi Bank's valuation grade has moved from attractive to fair, indicating a shift in its perceived value. The bank is currently fairly valued, with a PE ratio of 12.24, a price-to-book value of 0.76, and a PEG ratio of 0.08. In comparison to its peers, Axis Bank, which is also fairly valued, has a PE ratio of 12.69, while HDFC Bank is considered expensive with a PE ratio of 22.05.
Despite its fair valuation, Dhanlaxmi Bank has faced significant stock performance challenges, with a year-to-date return of -13.91%, contrasting sharply with the Sensex's positive return of 3.69% over the same period. This underperformance may suggest that the market has not fully recognized the bank's potential, especially given its low PEG ratio, which indicates growth prospects relative to its earnings.