Valuations. In the past, BF was growing at 30-35% and others were growing at 12-15%, so valuation gap made sense. In last few years, BF has slowed down while competition is growing faster. When the growth delta is not so high, valuations catch up (either price or time correction).
Today, Bajaj finance is growing at 25% and is valued at 8x book value, ICICI is growing at 20-25% valued at 3x. Valuation Gap is huge. Most banks are today available at less than half the value of Bajaj finance with similar growing potential in mid term. In such a scenario, these valuations will keep the share price suppressed.
Reliance’s entry in Financial services is another recent headwind and still to show in the share price.
Disclosure: was invested, recently sold off after Q3 results and moved to other players in BFSI space. Hence, Biased.
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