Is Kotak Mah. Bank overvalued or undervalued?

As of 12 May 2025, the valuation grade for Kotak Mahindra Bank has moved from expensive to very expensive. The bank is currently considered overvalued, with a PE ratio of 29.93, a price-to-book value of 3.52, and a PEG ratio of 0.00, indicating a lack of growth relative to its price. In comparison, HDFC Bank and ICICI Bank, both classified as expensive, have PE ratios of 22.51 and 22.01, respectively, suggesting that Kotak Mahindra Bank is trading at a significant premium compared to its peers.
The bank's return on equity stands at 11.75%, while its return on assets is at 1.98%, which are respectable figures but do not justify the high valuation. Additionally, the net NPA to book value ratio of 1.15 indicates a manageable level of non-performing assets. Despite Kotak Mahindra Bank's strong recent performance, with a year-to-date return of 19.46% compared to the Sensex's 5.59%, the overall valuation metrics suggest that the stock is overvalued in the current market environment.