Is Shriram AMC overvalued or undervalued?

As of 19 August 2025, the valuation grade for Shriram AMC has moved from very expensive to risky, indicating a significant shift in its perceived value. The company is currently assessed as overvalued based on its financial ratios, including a PE ratio of -52.48, an EV to EBITDA ratio of -50.60, and a ROE of -28.43%. These figures suggest that the company is struggling to generate profits and is not performing well relative to its peers.
In comparison to its industry peers, Shriram AMC's valuation metrics are starkly unfavorable. For instance, Life Insurance, categorized as very attractive, has a PE ratio of 11.61 and an EV to EBITDA of 9.04, while Bajaj Finance, deemed very expensive, has a PE of 32.19 and an EV to EBITDA of 18.15. The stark contrast in these ratios highlights Shriram AMC's overvaluation in the current market context. Furthermore, the company's stock has underperformed against the Sensex over the past year, with a return of -13.27% compared to the Sensex's 1.52%, reinforcing the notion that Shriram AMC is currently overvalued.