Is IDFC First Bank overvalued or undervalued?

As of 17 October 2025, IDFC First Bank's valuation grade has moved from expensive to very expensive, indicating a significant increase in perceived overvaluation. The bank is currently considered overvalued, with a PE ratio of 44.86, a Price to Book Value of 1.52, and a PEG ratio of 0.00. In comparison, HDFC Bank, which is classified as expensive, has a PE ratio of 22.22, while ICICI Bank, rated as fair, has a PE ratio of 20.98. The notable outlier in this analysis is the bank's low ROE of 3.39% and ROA of 0.36%, which further highlights the disparity in its valuation compared to its peers. Additionally, IDFC First Bank's net NPA to Book Value stands at 3.49%, suggesting potential concerns regarding asset quality. Despite a year-to-date return of 13.87%, which outperformed the Sensex's 7.44%, the overall valuation metrics indicate that IDFC First Bank is not justified at its current price level.