Is ICICI Pru Life overvalued or undervalued?

As of 6 January 2025, the valuation grade for ICICI Pru Life has moved from very attractive to very expensive, indicating a significant shift in its market perception. The company appears to be overvalued at this time. Key ratios such as the PE ratio at 77.62, EV to EBIT at 92.73, and a PEG ratio of 2.00 suggest that the stock is trading at a premium compared to its earnings growth potential.
In comparison to its peers, ICICI Pru Life's valuation stands out, with a notably higher PE ratio than many competitors in the insurance sector. For instance, if we consider a peer like HDFC Life, which has a PE ratio closer to 50, ICICI Pru Life's valuation seems excessive. Additionally, the company's recent stock performance has lagged behind the Sensex, with a year-to-date return of -3.53% compared to the Sensex's 5.61%, further reinforcing the notion that the stock may be overvalued in the current market environment.