Is Shriram AMC overvalued or undervalued?

As of 23 October 2025, Shriram AMC's valuation grade has moved from very expensive to risky, indicating a significant shift in its perceived value. The company appears to be overvalued based on its current metrics, particularly with a PE ratio of -39.50, an EV to EBITDA ratio of -37.20, and a ROE of -28.43%. These figures suggest that the company is struggling to generate profits and returns for its shareholders.
When compared to peers, Shriram AMC's valuation stands out unfavorably. For instance, Bajaj Finance has a PE ratio of 39.07, while Life Insurance boasts a much lower PE of 11.68, highlighting the disparity in valuation within the sector. Additionally, Shriram AMC's negative earnings ratios and high EV to Sales ratio of 75.14 further reinforce the notion of overvaluation. Despite a strong historical performance over the long term, recent stock performance has lagged behind the Sensex, with a year-to-date decline of 31.93% compared to the Sensex's 8.21% gain, underscoring the current valuation concerns.