Is IIFL Finance overvalued or undervalued?

As of 10 October 2025, IIFL Finance's valuation grade has moved from fair to very expensive, indicating a significant shift in its market perception. The company is currently assessed as overvalued based on key financial ratios, with a PE Ratio of 22.91, an EV to EBITDA of 11.76, and a Price to Book Value of 1.68. These metrics suggest that the stock is trading at a premium compared to its earnings and book value.
In comparison to its peers, IIFL Finance's PE ratio is notably lower than Bajaj Finance's 36.56, which is also categorized as very expensive, while it is significantly higher than Life Insurance's attractive valuation with a PE of 11.65. The company's recent stock performance has outpaced the Sensex, with a year-to-date return of 18.59% compared to the Sensex's 5.58%, but this does not mitigate the overvaluation indicated by its current ratios. Overall, IIFL Finance appears to be overvalued in the current market environment.