Valuations of non-financials look stretched
Reuters Market Eye - Valuations of Indian non-banking financial companies are beginning to look stretched, after surging this year on hopes parliament will approve a bill laying the groundwork to issue banking licences for the sector, analysts have said.
Likely contenders to obtain banking licences are trading at much higher price-to-book valuations than established private sector banks such as Axis Bank (AXBK.NS) and ICICI bank(ICBK.NS).
For graphic: link.reuters.com/qam64t
Shares of NBFCs have surged this year, with L&T Finance Holdings (LTFH.NS) gaining 109 percent as of Friday's close, and Shriram Transport Finance (SRTR.NS) rising 74 percent. Mahindra and Mahindra Financial Services (MMFS.NS) has risen 78.5 percent.
That's well above the Nifty's 27.2 percent gain, and the gains made by private banks such as ICICI Bank (ICBK.NS), which has risen 65.9 percent.
Passage of the bank amendment bill, which is being debated in the winter session of parliament, due to end on December 20, is a pre-condition for awarding licences.
"Its insanity. I think when the actual licenses are awarded we will sell on news on these counters," said G. Chokkalingam, executive director & chief investment officer at Centrum Wealth Management.
- Tweet this
- Share this
- Digg this
- U.S. strikes have slowed Iraq militants but not weakened them - Pentagon
- India Inc happy with Modi, but holding back on investment: poll
- Modi to launch plan for every Indian household to have bank account
- U.S. seeks coalition against Islamic State, but military partners no sure bet
- Modi eyes breakthrough nuclear pact on Japan trip
CEOs in India are optimistic that Prime Minister Narendra Modi will spur the economy, an opinion poll showed on Thursday, but most are not ready to make new investments and say there are no signs yet of improvement on the ground. Full Article
Adani buys Australia coal mine royalty rights from Linc for $145 million Full Article