Is TCI Finance overvalued or undervalued?

As of 17 October 2025, the valuation grade for TCI Finance has moved from risky to very expensive, indicating a significant shift in its perceived market value. The company is currently overvalued, as evidenced by its PE ratio of 4.35, which, while low, is misleading given the negative price-to-book value of -0.20 and the negative EV to EBIT and EV to EBITDA ratios of -4.89. These figures suggest that the company's financial health is concerning, particularly with a return on equity (ROE) that is also negative.
When compared to its peers, TCI Finance stands out unfavorably. For instance, Bajaj Finance has a PE ratio of 38.21 and an EV to EBITDA of 20.25, while Life Insurance boasts a PE of 11.49 and an EV to EBITDA of 8.94, both indicating a much more favorable valuation. Additionally, TCI Finance's recent stock performance has been poor, with a year-to-date return of -37.16%, significantly underperforming the Sensex's return of 7.44% during the same period. This further reinforces the conclusion that TCI Finance is overvalued in its current state.