Is RBL Bank overvalued or undervalued?

As of 15 October 2025, RBL Bank's valuation grade has moved from expensive to very expensive, indicating a significant shift in its perceived value. The bank is currently overvalued, with a PE ratio of 35.05, a Price to Book Value of 1.19, and a PEG ratio of 0.00, which suggests that the stock is not justified by its earnings growth potential. In comparison, HDFC Bank and ICICI Bank, both classified as expensive, have PE ratios of 21.7 and 20.42, respectively, highlighting the premium at which RBL Bank is trading relative to its peers. Additionally, RBL Bank's return on equity (ROE) stands at a low 3.40%, and its return on assets (ROA) is just 0.36%, further supporting the notion of overvaluation given the high price multiples. Despite recent strong stock performance, with a year-to-date return of 89.56% compared to the Sensex's 5.72%, the underlying financial metrics suggest that RBL Bank's current valuation is not sustainable in the long term.