Is Paul Merchants overvalued or undervalued?

As of 13 November 2025, the valuation grade for Paul Merchants has moved from expensive to risky. The company is currently considered undervalued based on its financial ratios. The PE ratio stands at -18.68, while the EV to EBITDA ratio is -10.56, indicating significant challenges in profitability. Additionally, the Price to Book Value ratio is at 0.32, suggesting that the market is valuing the company at a fraction of its book value.
In comparison to its peers, Paul Merchants shows a stark contrast; for instance, Bajaj Finance has a PE ratio of 34.18 and EV to EBITDA of 19.37, while Life Insurance boasts a PE ratio of 11.18 and EV to EBITDA of 9.22. These comparisons highlight the relative undervaluation of Paul Merchants within its industry. Despite recent stock performance lagging behind the Sensex, particularly with a year-to-date return of -30.58% compared to the Sensex's 8.11%, the current valuation metrics suggest that the stock may offer a buying opportunity for investors looking for value in the NBFC sector.