Is Indbank Merchant overvalued or undervalued?

As of 10 October 2025, Indbank Merchant's valuation grade has moved from fair to expensive, indicating a shift in perception regarding its market value. The company is currently considered overvalued. Key ratios highlight this position: the PE ratio stands at 24.87, the EV to EBITDA ratio is 9.37, and the ROE is 8.46%.
In comparison to its peers, Indbank Merchant's valuation appears high, especially when juxtaposed with Life Insurance, which has a PE ratio of 11.65 and an EV to EBITDA of 9.08, categorizing it as very attractive. Additionally, Bajaj Finserv is also marked as expensive with a PE of 33.63, further emphasizing Indbank's relative overvaluation. Notably, while Indbank has shown impressive returns over the long term, with a 5-year return of 368.61%, its recent performance has lagged behind the Sensex, suggesting a potential correction in its valuation.