Is Equitas Sma. Fin overvalued or undervalued?

As of 6 August 2025, the valuation grade for Equitas Small Finance has moved from attractive to fair. The company is currently considered overvalued based on its high PE ratio of 44.45, a price-to-book value of 1.08, and a PEG ratio of 0.00, which indicates a lack of growth relative to its price. In comparison, HDFC Bank and ICICI Bank, both classified as expensive, have PE ratios of 21.95 and 21.06, respectively, highlighting the premium at which Equitas is trading.
The company's return metrics also raise concerns, with a year-to-date return of -10.66% compared to a positive 3.08% for the Sensex, and a one-year return of -27.72% against the Sensex's 2.48%. Given these factors, Equitas Small Finance appears to be overvalued in the current market environment.