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

FRESH RULES

A man speaks on his mobile phone in front of the Reserve Bank of India (RBI) seal at the RBI headquarters in Mumbai July 30, 2013. REUTERS/Vivek Prakash/Files

RBI says all companies must apply 2-step payments for credit cards

The Reserve Bank of India said that all transactions involving domestic credit cards must follow rules requiring additional verification, a stance that could impact companies such as Uber Technologies Inc that provide more simple app-based purchases.  Full Article 

REUTERS SHOWCASE

Record Highs

Record Highs

Nifty touches record high; software stocks gain.  Full Article 

New Adviser

New Adviser

Arvind Subramanian likely to be chief econ adviser.  Full Article 

Pricing Mechanism

Pricing Mechanism

Govt sets up a four-member panel to re-examine gas pricing.  Full Article 

Royalty Rates

Royalty Rates

India to hike iron ore royalty, miners may struggle to pass on extra cost.  Full Article 

Diesel Deregulation

Diesel Deregulation

Oil ministry to seek Cabinet nod on diesel deregulation - sources  Full Article 

Commodities

Commodities

Gold near two-month low; set for weekly drop on interest rate fears  Full Article 

Reuters Exclusive

Reuters Exclusive

Apple iPhone 6 screen snag leaves supply chain scrambling   Full Article 

Helping Regional Mills

Helping Regional Mills

Govt raises sugar import duty to 25 pct from 15 pct.  Full Article 

Curbing Risks

Curbing Risks

RBI to lower ceiling on bank loans to a single corporate group.  Full Article 

Reuters India Mobile

Reuters India Mobile

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