Mostly when a company starts investing in other companies through equity, and in turn increases its book value, markets tend to value them at a lower PB ratio. Look at all the holding companies, or companies which have substantial percentage of their cash in stocks, and you will find similar trend everywhere. The takeaway point in such cases is that company thinks of generating more returns through investment in equity in non related business rather than growing inorganically.
A better metric for such companies is Market capitalization to Sales ratio, which for Maithan has only increased over time.
Subscribe To Our Free Newsletter |