Indian companies are expensive globally. Stock Market news.



India's asset management companies are the most expensive worldwide.





The reach of mutual funds in India is quite limited. This is just a quarter of the world average. But the valuation of Indian asset management companies is much higher than the global rival companies. Only two AMCs - HDFC AMC and Reliance Nippon Life AAMC (Nippon Life) - are listed in Bharti. These companies are trading at a PE of 71 times and 44 times respectively. On this basis, they are the most expensive mutual fund companies in the world.


According to Bloomberg data, the average PE of asset management companies around the world is 19.6. Both Indian companies have given more than 100 percent return in the year 2019. This is a better performance than the BSE 500 Index and the second AMC in the world.


Despite a reduction in the expense ratio, the Indian listed AMC has recorded an increase in profits. Their reach is continuously increasing. Investors are getting attracted to SIP. The asset under management (AUM) of domestic mutual funds has grown at a rate of 25 per cent in the last five years, which is the best after China.


According to information received from the Indian Mutual Fund Association (Amphi), an investment of Rs 8,273 crore was made through SIP in November 2019, which was just Rs 3,884 crore three years ago. Along with profits, AMC's pre-tax profit also increased in the September quarter.







As the reach of these companies increases, their attraction increases even more. The total asset under-management of Indian mutual funds is equal to 11 per cent of the country's GDP, while its worldwide average is 55 per cent.


India's share in global GDP and market cap is more than 3 percent. But it has only 0.7 per cent stake in mutual fund assets. However, the rising valuation of these shares can make investors wary of these stocks.

According to JM Financial, the current valuations of HDFC AMT and Reliance Nippon Life point towards aggressive growth. It shows that in the coming 10 years, these companies are expected to grow 26 per cent in AUM.


Like our Facebook page for regular updates on personal finance and stock market. Click here to like this page.

Post a Comment

0 Comments