Is Shriram Finance overvalued or undervalued?

As of 25 July 2025, the valuation grade for Shriram Finance has moved from attractive to fair, indicating a shift in its perceived value. The company is currently fairly valued based on its key financial ratios, including a PE Ratio of 13.68, an EV to EBITDA of 10.41, and a ROE of 14.67%.
When compared to its peers, Shriram Finance's valuation stands in contrast to Bajaj Finance, which is considered very expensive with a PE Ratio of 32.58, and Life Insurance, which is fairly valued with a PE Ratio of 11.6. This suggests that while Shriram Finance is not undervalued, it is also not as expensive as some of its competitors. Notably, the company's stock has outperformed the Sensex over the past year, returning 14.78% compared to the Sensex's 1.78%, indicating strong relative performance despite the recent downgrade in valuation.