Is HDFC AMC overvalued or undervalued?

As of 16 October 2025, HDFC AMC's valuation grade has moved from very expensive to fair, indicating a shift in perception regarding its market value. The company is currently fairly valued. Key ratios include a PE ratio of 45.28, an EV to EBITDA of 40.38, and a PEG ratio of 1.88, which suggest that while the company is priced at a premium, it is not excessively so compared to its previous valuation.
In terms of peer comparison, HDFC AMC's PE ratio is significantly higher than that of Bajaj Finance, which is at 38.01 and categorized as very expensive, while it is also higher than Life Insurance, which is very attractive with a PE of 11.63. Notably, HDFC AMC has outperformed the Sensex, with a year-to-date return of 38.22% compared to the Sensex's 6.82%, reinforcing its relatively strong market position despite the high valuation ratios.