Is Dharani Finance overvalued or undervalued?

As of 29 May 2025, the valuation grade for Dharani Finance has moved from attractive to very attractive, indicating a significant improvement in its valuation outlook. The company is currently assessed as undervalued. Key ratios supporting this conclusion include a PE Ratio of 5.30, a Price to Book Value of 0.59, and an EV to EBITDA of 5.37, all of which suggest that the stock is trading at a discount compared to its earnings and asset value.
In comparison to its peers, Dharani Finance stands out with a PEG Ratio of 0.01, which is substantially lower than many competitors, indicating strong growth potential relative to its price. For instance, if we consider similar companies in the industry, their PE ratios typically hover around 10-15, making Dharani Finance's valuation appear particularly attractive. Additionally, while the stock has underperformed against the Sensex in the short term, it has shown a remarkable 44.43% return over the past year, reinforcing the potential for future growth.