Is HDFC Life Insur. overvalued or undervalued?

Sep 19 2025 08:06 AM IST
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As of September 18, 2025, HDFC Life Insurance is considered overvalued with a PE ratio of 89.99 and other high valuation metrics, despite a year-to-date return of 27.25%, indicating that investors may be paying too much for its future growth potential.
As of 18 September 2025, HDFC Life Insurance has moved from a fair to an expensive valuation grade. The company is currently considered overvalued, with a PE ratio of 89.99, a Price to Book Value of 9.93, and an EV to EBITDA of 179.68. These ratios significantly exceed those of its peers, such as Bajaj Finance, which has a PE ratio of 35.53, and SBI Life Insurance, which boasts a PE ratio of 73.42, indicating that HDFC Life is trading at a premium compared to its competitors.

In addition to its high valuation ratios, HDFC Life's ROCE stands at a modest 4.93%, while its ROE is 11.03%. The company's dividend yield is also low at 0.27%, further contributing to the perception of overvaluation. Although HDFC Life has outperformed the Sensex year-to-date with a return of 27.25% compared to the Sensex's 6.24%, the high valuation metrics suggest that investors may be paying too much for future growth potential.
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