Who Cares About Stock Valuations Any Longer?

Subscribe to GoodReturns
For Quick Alerts
ALLOW NOTIFICATIONS  
For Daily Alerts

    Stocks have been mercilessly hammered in the last two-months, that selecting stocks based on fundamentals has become increasingly futile.

    It seems all of the money is being deployed in just select 3-4 large cap stocks. It's difficult to understand how DHFL shares can trade at a p/e of just 4 times one year forward earnings.

    The company has clarified time and again that the liquidity remains extremely sound, till March 2019 to fulfill all commitments and its portfolio is all retail lending.

     

    Now, the problem has been worries for NBFCs over regulatory tightening for the industry, based on problems at IL&FS. Of course, it is good news for the industry and stocks like DHFL should gain.

    Take the case of PC Jeweller. The stock has dropped from Rs 500 levels to Rs 55. The management has clarified that business seems to be doing good and the shares are available at a p/e of 5 times. These stocks are all trading way below book value. Of course, there were transparency issues with PC Jeweller, but, there have been no issues of auditors resigning as in some other cases.

    There are so many such examples, where stocks have been beaten down mercilessly, even if there is a simple case of regulatory tightening, which is actually good for these companies. Investors have become extremely sensitive to news. They are willing to just dump some smaller names and take shelter in some of the good quality large cap stocks.

    This means the broader markets would have to languish and it seems that they would have to languish for a long period of time.

    Who Cares About Stock Valuations Any Longer?

    In the meantime, it is rest for equity research analysts as no amount of fundamental analysis is working, as the broader markets have gone for a toss.

    GoodReturns.in

    Read more about: sensex nifty
    Story first published: Tuesday, October 9, 2018, 10:15 [IST]
    Company Search
    Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'

    Find IFSC

    Get Latest News alerts from Goodreturns

    We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Goodreturns sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Goodreturns website. However, you can change your cookie settings at any time. Learn more