Is Karur Vysya Bank overvalued or undervalued?

As of 23 October 2025, the valuation grade for Karur Vysya Bank has moved from fair to very expensive, indicating a significant shift in its perceived value. The bank is currently considered overvalued based on its key financial ratios, including a PE ratio of 11.30, a Price to Book Value of 1.99, and a PEG ratio of 0.65. These figures suggest that while the bank is generating a reasonable return on equity of 17.64% and a return on assets of 1.76%, its valuation metrics do not justify the current price level.
In comparison to its peers, Karur Vysya Bank's valuation stands out as notably high. For instance, HDFC Bank, which is categorized as expensive, has a PE ratio of 21.79, while ICICI Bank, rated as fair, has a PE ratio of 19.66. This disparity highlights that Karur Vysya Bank's valuation is not aligned with the broader market trends in the banking sector. Additionally, the bank has outperformed the Sensex significantly over various time frames, including a 37.80% return over the past year compared to the Sensex's 5.59%, reinforcing the notion that its current valuation may be unsustainable.