Valuations of non-financials look stretched

Mon Dec 17, 2012 3:47pm IST

Related Topics

Stocks

   

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.

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

India-China Ties

REUTERS SHOWCASE

LIC on Markets

LIC on Markets

LIC chairman bullish on Indian markets  Full Article 

Infosys-Huawei

Infosys-Huawei

Infosys partners with China's Huawei for cloud-based services  Full Article 

Gold Outlook

Gold Outlook

Gold imports seen up, premiums likely to double on festive buying  Full Article 

Trade Dispute

Trade Dispute

U.S. to press India on trade row during Modi's Washington visit  Full Article 

Fed Policy Meet

Fed Policy Meet

Fed renews zero rate pledge, but hints at steeper rate hike path  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage