Is Paragon Finance overvalued or undervalued?

As of 10 November 2025, Paragon Finance's valuation grade has moved from fair to expensive, indicating a shift in its perceived value. The company is currently overvalued, with a PE ratio of 27.76, an EV to EBITDA of -15.76, and a ROE of only 0.26%. In comparison to peers, Bajaj Finance is at a PE of 38.76, while Life Insurance boasts a much lower PE of 11.14, highlighting the disparity in valuation within the sector.
Despite a recent uptick in stock price, Paragon Finance's year-to-date return of -19.31% starkly contrasts with the Sensex's gain of 6.91%, further supporting the conclusion of overvaluation. The company's financial metrics, particularly the negative EV to EBIT and EV to Capital Employed ratios, suggest underlying challenges that may not justify its current market price.