After the recent IPOs of Bandhan Bank and Sandhar Technologies, stock market expert Deven Choksey says while both are good companies, Bandhan Bank shares may see a time correction.
After the recent IPOs of Bandhan Bank and Sandhar Technologies, stock market expert Deven Choksey says while both are good companies, Bandhan Bank shares may see a time correction. In an interview to ET Now, Deven Choksey of KR Choksey Investment Advisors said that Bandhan Bank’s valuation may not sustain and a correction is likely. Further, he noted that given the bank’s quality, the valuation may not come down but a time correction is likely.
Interestingly, at a time when stock markets have seen a steep volatility, Bandhan Bank managed to post a strong debut, surging 30% on listing. Last week, Bandhan Bank shares listed at Rs 499, implying a premium of 30% as compared to the issue price of Rs 375. Currently, the shares are trading at Rs 477.25 on NSE this afternoon. Interestingly, post listing the msme focussed lender surpassed the market capitalisation of all listed PSU banks except State Bank of India with a whopping mcap of over Rs 58,000 crore.
Deven Choksey says that the bank shares may not show much appreciation post listing gains. “The fact is this particular bank is valued at relatively stretched valuations and for the MFI business,” Deven Choksey told ET Now.
After Sandhar Technologies listed at a 4% premium yesterday, Deven Choksey says that the company’s valuations look stretched as compared to peers such as Minda Corporation. Choksey observed that the size of business is much larger in companies such as Minda Corporation. Further, the expert advised investors to avoid chasing companies with higher valuations and buy companies which have valuation advantages in the near future.
Given the focus on private sector banks, Deven Choksey says that the pain may not yet be over in ICICI Bank and Axis Bank. “There is no doubt on that aspect; on the other side, banks like ICICI, Axis have already proven themselves,” Choksey observed adding that a balance will have to be created in selecting them currently, as their books are doubted at this point of time and there may be some more pain left in this entire activity.