Is Muthoot Finance overvalued or undervalued?

As of 4 July 2025, Muthoot Finance's valuation grade has moved from fair to expensive, indicating that the company is currently overvalued. The key ratios supporting this assessment include a PE ratio of 20.18, a Price to Book Value of 3.64, and an EV to EBITDA of 13.49. Compared to its peers, Muthoot Finance's PE ratio is significantly higher than Life Insurance's 12.32 and IRFC's 27.99, both of which are considered fair, further emphasizing its overvaluation.
In addition, Muthoot Finance's PEG ratio of 0.89 suggests that while the company may have growth potential, its current pricing does not reflect a favorable investment opportunity relative to its earnings growth. The recent performance of Muthoot Finance, with a year-to-date return of 24.52% compared to the Sensex's 6.77%, may indicate strong market sentiment; however, this does not alter the conclusion that the stock is overvalued at its current price of 2666.00.