Is L&T Finance Ltd overvalued or undervalued?

Aug 22 2025 08:01 AM IST
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As of August 21, 2025, L&T Finance Ltd is considered overvalued with a PE ratio of 20.84, an EV to EBITDA of 13.80, and a PEG ratio of 2.95, especially when compared to its peers, indicating a significant premium relative to its earnings growth potential despite a strong year-to-date return of 63.57%.
As of 21 August 2025, the valuation grade for L&T Finance Ltd has moved from fair to expensive, indicating a shift in perception regarding its market value. The company is currently assessed as overvalued. Key ratios include a PE ratio of 20.84, an EV to EBITDA of 13.80, and a PEG ratio of 2.95, all of which suggest that the stock is trading at a premium compared to its earnings growth potential.

In comparison to its peers, L&T Finance Ltd's valuation stands out, particularly against Life Insurance, which is rated very attractive with a PE of 11.62, and Bajaj Finance, which is categorized as very expensive with a PE of 31.94. This disparity highlights that L&T Finance Ltd is priced significantly higher relative to its earnings and growth prospects. Additionally, the company's strong stock performance, with a year-to-date return of 63.57% compared to the Sensex's 4.94%, reinforces the narrative of overvaluation as the market may be pricing in future growth that is not yet realized.
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