Is Karur Vysya Bank overvalued or undervalued?

As of 31 July 2025, the valuation grade for Karur Vysya Bank has moved from fair to expensive, indicating a shift in its perceived value. The bank is currently considered overvalued based on its financial metrics. Key ratios include a PE ratio of 10.74, a price to book value of 1.81, and a PEG ratio of 0.62, which suggest that while the earnings growth may be attractive, the current price does not justify the valuation compared to its peers.
In comparison to its peers, HDFC Bank has a significantly higher PE ratio of 22.34, while Axis Bank is at 12.68, indicating that Karur Vysya Bank's valuation is not competitive within the sector. The bank's return on equity stands at 16.80%, which is decent, but when juxtaposed with the overall market performance, it appears that despite a strong YTD return of 23.79% compared to the Sensex's 3.90%, the current price level may not be sustainable.