Is IIFL Finance overvalued or undervalued?

As of 30 June 2025, the valuation grade for IIFL Finance has moved from expensive to fair, indicating a more favorable assessment of its market position. The company is currently fairly valued, with a PE ratio of 20.84, an EV to EBIT of 12.42, and an ROE of 7.78%. In comparison to its peers, IIFL Finance's valuation metrics are more attractive than Bajaj Finance, which is deemed very expensive with a PE of 34.97, and Bajaj Finserv, also expensive with a PE of 37.
The peer comparison shows that while IIFL Finance is fairly valued, companies like Life Insurance with a PE of 12.74 and I R F C at 28.49 are also positioned as fair, suggesting that IIFL Finance is competitive within its sector. Notably, the stock has outperformed the Sensex year-to-date with a return of 14.35% compared to the Sensex's 7.00%, reinforcing its valuation story.