Is Dhanlaxmi Bank overvalued or undervalued?

As of 17 October 2025, the valuation grade for Dhanlaxmi Bank has moved from very attractive to fair, indicating a shift in its perceived value. The bank is currently fairly valued, with a PE ratio of 11.31, a price-to-book value of 0.70, and a PEG ratio of 0.07. In comparison to its peers, HDFC Bank is considered expensive with a PE ratio of 22.22, while ICICI Bank is also fairly valued at a PE of 20.98, highlighting Dhanlaxmi Bank's relative affordability in the sector.
Despite its fair valuation, Dhanlaxmi Bank has experienced significant underperformance relative to the Sensex, with a year-to-date return of -20.43% compared to the Sensex's 7.44%. This underperformance, alongside a net NPA to book value of 9.87% and low ROE of 6.18%, suggests potential concerns regarding asset quality and profitability, which could impact future valuations.