Is Sundaram Finance overvalued or undervalued?

As of 22 September 2025, Sundaram Finance's valuation grade has moved from fair to expensive, indicating a shift in its market perception. The company is currently considered overvalued. Key ratios include a PE ratio of 26.97, an EV to EBITDA of 15.69, and a PEG ratio of 1.18, all of which suggest that the stock is trading at a premium compared to its earnings and growth potential.
In comparison with peers, Bajaj Finance has a significantly higher PE ratio of 35.96, while Life Insurance stands out as very attractive with a PE of 11.76. This indicates that Sundaram Finance is priced higher than some competitors, despite its relatively lower return metrics, such as a ROCE of 9.14% and ROE of 14.24%. Additionally, while Sundaram Finance has shown strong returns over the long term, its recent performance has lagged behind the Sensex, particularly over the past month, where it declined by 11.60% compared to a 1.05% increase in the Sensex.