Is Paragon Finance overvalued or undervalued?

As of 10 October 2025, the valuation grade for Paragon Finance has moved from expensive to very expensive. This indicates a significant shift in its perceived value, suggesting that the company is currently overvalued. The key ratios reflect this situation, with a PE Ratio of 22.40, a Price to Book Value of 0.74, and a troubling EV to EBIT of -21.58, which raises concerns about profitability.
When compared to its peers, Paragon Finance stands out unfavorably. For instance, Bajaj Finance has a PE Ratio of 36.56, while Life Insurance boasts a much lower PE of 11.65, highlighting the disparity in valuation within the industry. Additionally, while Paragon's ROE is 2.32%, it pales in comparison to more attractive peers like SBI Life Insurance, which has a ROE of 72.97%. The recent stock performance shows that Paragon Finance has underperformed the Sensex over the past year, with a return of -16.35% compared to the Sensex's 1.09%. This further reinforces the conclusion that Paragon Finance is overvalued.