Is Explicit Finance overvalued or undervalued?

As of 17 October 2025, the valuation grade for Explicit Finance has moved from expensive to very expensive, indicating a significant shift in its market perception. The company appears to be overvalued based on its current metrics, with a PE ratio of 51.22, an EV to EBIT of 7.85, and a ROE of only 2.40%.
In comparison to its peers, Explicit Finance's valuation stands out unfavorably; for instance, Bajaj Finance has a PE ratio of 38.21, while Life Insurance boasts a much lower PE of 11.49, suggesting that Explicit Finance is trading at a premium without corresponding financial performance. Additionally, despite a strong year-to-date return of 46.85% compared to the Sensex's 7.44%, the elevated valuation ratios indicate that the stock may not sustain its current price levels in the long term.