Is Shriram Finance overvalued or undervalued?

As of 18 July 2025, Shriram Finance's valuation grade has moved from fair to attractive, indicating a positive shift in its market perception. The company is currently considered undervalued, with a PE ratio of 14.65, an EV to EBIT of 11.38, and a ROE of 14.67%. In comparison to its peers, Life Insurance has a PE of 12.08 and EV to EBITDA of 9.48, while Bajaj Finance is categorized as very expensive with a PE of 35.18 and EV to EBITDA of 19.57. The company's recent performance has also been noteworthy, with a year-to-date return of 11.45%, significantly outperforming the Sensex's return of 4.63% during the same period. This strong performance, combined with its attractive valuation metrics, reinforces the conclusion that Shriram Finance is indeed undervalued in the current market context.