Financial services companies (non-banking) have done very well on the bourses in recent weeks. Most companies in this space are quoting at price-to-earnings multiples of over 40+ and five times their book values. Consider the following:
- Reliance Capital: Consolidated P/E - 63.2 times
- India Infoline: 115.4 times
- JM Financials: 70 times
- IL&FS: 44 times
- Indiabulls Financial Services: 32 times
- Motilal Oswal: 50 times
- Edelweiss Capital: 100 times
- Industry P/E: 66 times
There is one company which is currently available at a significant discount to its listed peers - Sundaram Finance Ltd.
SFL reported a Consolidated PAT of Rs.140 crore for the year ended 31st March 2007. On a 12 month trailing basis, my estimate is that the company's earned a net profit of Rs.160 crore. At the current market price of Rs.837, the scrip is quoting at a P/E of less than 15 times. That too on a trailing basis.
SFL's primary business is hire purchase and lease financing of vehicles (commercial vehicles and passenger cars) and of industrial machinery.
The company also undertakes:
- bill discounting,
- commercial mortgage lending,
- mutual funds (thru Sundaram BNP Paribas AMC),
- home finance (Sundaram Home Finance, partly owned by BNP Paribas),
- general insurance (Royal Sundaram Alliance),
- logistics (infreight logistics),
- financial products distribution (Sundaram Finance Distribution), etc.
Addnl. Points / Counter points ???
Disclosure: I have an open position in this stock in the portfolios that I manage.