Is GSB Finance overvalued or undervalued?

As of 15 July 2025, GSB Finance has moved from a fair valuation to a very expensive rating. The company is currently overvalued based on its key financial ratios, including a PE ratio of 20.26, an EV to EBIT of 20.09, and a Price to Book Value of 1.41. Compared to its peers, GSB Finance's valuation stands out as significantly higher; for instance, Life Insurance has a PE ratio of 12.11, and Bajaj Finserv has a PE of 36.69, indicating that GSB Finance's valuation is not justified relative to its performance metrics.
The company's return on capital employed (ROCE) is at 6.19%, while the return on equity (ROE) is only 4.52%, which further supports the notion of overvaluation. Despite a remarkable one-year stock return of 98.59%, GSB Finance's year-to-date performance shows a decline of 30.71%, contrasting sharply with the Sensex's gain of 5.67% during the same period. This suggests that while the stock may have had a strong past performance, its current valuation does not align with its financial fundamentals.