Is Indostar Capital overvalued or undervalued?

As of 14 August 2025, the valuation grade for Indostar Capital has moved from very expensive to expensive, indicating a slight improvement in its perceived value. However, the company remains overvalued based on its current financial metrics. The PE ratio stands at -11.63, which is a significant outlier compared to its peers, and the EV to EBITDA ratio is 28.99, further suggesting overvaluation.
In comparison to its peers, Life Insurance has a PE ratio of 11.53 and an EV to EBITDA of 8.97, both of which highlight a stark contrast to Indostar Capital's metrics. Other peers like Bajaj Finserv also reflect higher valuations with a PE of 32.28 and an EV to EBITDA of 12.53. Given these comparisons and the company's low ROE of 1.45% and ROCE of 7.71%, Indostar Capital is assessed as overvalued in the current market environment. Despite a recent one-year stock return of 12.1%, which outperformed the Sensex's 1.89%, the overall financial ratios suggest caution for potential investors.