Is IFCI overvalued or undervalued?

As of 6 November 2025, the valuation grade for IFCI has moved from very expensive to expensive, indicating a slight improvement in its relative valuation stance. Despite this change, the company remains overvalued based on its current metrics. The PE ratio stands at 45.39, which is significantly higher than peers like Bajaj Finance at 37.19 and Bajaj Finserv at 34.67. Additionally, the EV to EBITDA ratio for IFCI is 10.71, while its PEG ratio is notably low at 0.36, suggesting potential growth but also highlighting the high valuation relative to earnings.
When comparing IFCI to its peers, it is evident that it is trading at a premium, with its price to book value at 1.68 and EV to sales at 6.77. The company's return on equity (ROE) is a concerning 1.99%, which further supports the view that it is overvalued in the current market context. Recent stock performance shows that IFCI has underperformed against the Sensex, with a year-to-date return of -12.76% compared to the Sensex's 6.62%, reinforcing the notion that the stock may not be a favorable investment at this time.