Is Dhanlaxmi Bank overvalued or undervalued?

As of 17 October 2025, Dhanlaxmi Bank's valuation grade has moved from very attractive to fair, indicating a shift in its perceived investment quality. The bank is currently fairly valued based on its financial metrics, which include 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.
Despite its fair valuation, Dhanlaxmi Bank has underperformed relative to the Sensex, with a year-to-date return of -20.43% compared to the Sensex's 7.44%. This underperformance, coupled with a net NPA to book value of 9.87%, suggests that while the bank may not be overvalued, it faces significant challenges that could impact its future growth prospects.