Is Shriram Finance overvalued or undervalued?

As of 16 July 2025, the valuation grade for Shriram Finance has moved from fair to attractive, indicating a positive shift in its perceived value. The company is currently considered undervalued, supported by a PE ratio of 15.17, an EV to EBITDA of 11.27, and a PEG ratio of 1.03. These ratios suggest that Shriram Finance is positioned favorably compared to its peers, particularly when compared to Life Insurance, which has a PE of 12.2, and Bajaj Finance, which is classified as very expensive with a PE of 34.42.
The company's strong performance is further highlighted by a return on equity (ROE) of 14.67% and a return on capital employed (ROCE) of 10.91%. Additionally, Shriram Finance has outperformed the Sensex over the past year, with a stock return of 18.39% compared to the Sensex's 2.38%. Overall, these factors reinforce the conclusion that Shriram Finance is undervalued in the current market landscape.