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 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, which suggests that it is trading at a low valuation relative to its earnings growth potential.
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. Notably, Dhanlaxmi Bank's return on equity stands at 6.18%, which is relatively low compared to industry standards. The recent stock performance has been underwhelming, with a year-to-date return of -20.43%, contrasting sharply with the Sensex's gain of 7.44% in the same period, reinforcing the notion that the bank may be undervalued in the current market environment.