A business growing at 20%+ deserves a higher PE but there is a huge regulatory hang. Sooner or later the government/SEBI will do something stupid and maim the entire F&O business.
SEBI recently did mandate brokers to negatively advertise their most profitable division by showing a warning message each time a user logs in. I found it very funny to think that all brokers had to put their engineers to build something which will harm their cashcow!
If they find that it didn’t work then they are sure to make even more discouraging move like capping F&O turnover of a individual based on their historical ITR etc.
Just look at the GST norms on casino, online gaming. One shot and the whole industry is jeopardized.
At say 30 PE owning a stock with such a risk (and other risks) may not justify the reward.
disc: invested
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