Is IIFL Finance overvalued or undervalued?

As of 23 October 2025, IIFL Finance's valuation grade has moved from very expensive to expensive, indicating a slight improvement in its perceived value. The company is currently considered overvalued based on its financial metrics. Key ratios include a PE Ratio of 22.97, an EV to EBITDA of 11.77, and a Price to Book Value of 1.69.
In comparison to its peers, IIFL Finance's PE Ratio is significantly lower than Bajaj Finance's 39.07, while being higher than Life Insurance's attractive valuation at 11.68. Additionally, the company's return on capital employed (ROCE) stands at 9.10%, which is relatively modest compared to the industry standards. Despite its recent stock performance showing a 1-week decline of 1.53% against a 1.30% gain in the Sensex, IIFL Finance has outperformed the index over the longer term, with a year-to-date return of 18.85% compared to the Sensex's 8.21%.