Is Dhanlaxmi Bank overvalued or undervalued?

As of 1 September 2025, Dhanlaxmi Bank's valuation grade has moved from fair to attractive, indicating a positive shift in its perceived value. The bank appears to be undervalued with a PE ratio of 11.37, a price-to-book value of 0.70, and a PEG ratio of 0.07, suggesting that the stock is trading at a significant discount relative to its earnings growth potential.
In comparison to its peers, Dhanlaxmi Bank's valuation stands out favorably against HDFC Bank, which has a PE ratio of 21.05, and ICICI Bank, with a PE ratio of 20.59, both categorized as expensive. Additionally, while the bank has a net NPA to book value of 9.87%, it still maintains a reasonable return on equity (ROE) of 6.18%. Despite recent underperformance compared to the Sensex, with a year-to-date return of -20.05% versus the Sensex's 2.85%, the attractive valuation suggests potential for recovery and growth.