Is Equitas Sma. Fin overvalued or undervalued?

As of 17 October 2025, the valuation grade for Equitas Small Finance has moved from fair to very expensive. The company appears to be overvalued based on its current financial ratios, including a PE ratio of -62.35, a price to book value of 1.05, and a PEG ratio of 0.00. The negative PE ratio indicates significant losses, which raises concerns about its profitability and future growth potential.
In comparison to its peers, Equitas Small Finance stands out unfavorably; for instance, HDFC Bank has a PE ratio of 22.22, while ICICI Bank is at 20.98, both of which suggest a much healthier valuation relative to earnings. Furthermore, the company's return on equity (ROE) is -1.69%, and its net NPA to book value is 5.63%, which are both indicators of financial distress. The stock has underperformed compared to the Sensex, with a year-to-date return of -12.69% against the Sensex's 7.44%, reinforcing the view that Equitas Small Finance is currently overvalued.