Is Muthoot Finance overvalued or undervalued?

Aug 25 2025 08:06 AM IST
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As of August 22, 2025, Muthoot Finance is considered overvalued with a PE Ratio of 17.42 and a Price to Book Value of 3.65, making it less attractive compared to peers like Life Insurance and Bajaj Finserv, despite its strong return on equity and year-to-date performance.
As of 22 August 2025, Muthoot Finance's valuation grade has moved from fair to expensive, indicating a shift in its market positioning. The company is currently overvalued based on its financial metrics. Key ratios include a PE Ratio of 17.42, a Price to Book Value of 3.65, and an EV to EBITDA of 12.05, which suggest that the stock is trading at a premium compared to its earnings and book value.

In comparison to its peers, Muthoot Finance's PE Ratio is significantly higher than that of Life Insurance, which has a PE of 11.55 and is rated very attractive. Additionally, Bajaj Finserv, rated as expensive, has a PE of 32.97, further illustrating the competitive landscape. Despite Muthoot Finance's strong return on equity at 20.96% and a solid year-to-date return of 24.71%, the overall valuation suggests that the stock is not a favorable investment at its current price of 2670.00.
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