December 17, 2012 / 8:44 AM / 5 years ago

MARKET EYE-Valuations of India's non-financials look stretched

* 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 and ICICI bank
.
For graphic: link.reuters.com/qam64t
* Shares of NBFCs have surged this year, with L&T Finance
Holdings gaining 109 percent as of Friday's close, and
Shriram Transport Finance rising 74 percent. Mahindra
and Mahindra Financial Services has risen 78.5
percent.
* That's well above the broader NSE index's 27.2 percent
gain, and the gains made by private banks such as ICICI Bank
, 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 Dec. 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.

 (abhishek.vishnoi@thomsonreuters.com /;
abhishek.vishnoi.reuters.com@reuters.net)

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