Is REC Ltd overvalued or undervalued?

As of 14 October 2025, the valuation grade for REC Ltd has moved from fair to expensive. The company is currently overvalued, with a PE ratio of 5.77, a Price to Book Value of 1.24, and an EV to EBITDA of 10.49. In comparison to its peers, Bajaj Finance is classified as very expensive with a PE ratio of 36.37, while Life Insurance is considered very attractive with an EV to EBITDA of 9.12. Despite REC Ltd's relatively high dividend yield of 5.16% and a strong ROE of 20.27%, the overall valuation metrics suggest that the stock is not a favorable investment at its current price of 370.25. The company's recent performance has lagged behind the Sensex, with a year-to-date return of -26.03% compared to the Sensex's positive 4.98%, reinforcing the view that REC Ltd is overvalued in the current market environment.