SKS Microfinance to always have better PE multiple: Gajendra Nagpal

ET Now spoke Gajendra Nagpal, CEO, Unicon Financial Solutions, on his views on SKS Microfinance.

The industrial development bank of India what is now called IDBI Bank and SKS Microfinance are valued at the same price. Help us which one should people be in?


We have to understand these two stocks separately because SKS Microfinance is being accumulated by the fund managers as a one very sexy company, as the one stock which has the scarcity premium attached to it.

People have been banking upon the kind of growth that this company have shown over last 3-4 years of its existence and people are willing to discount give it a better PE multiple because they foresee the same growing is going to continue because of the aggressive stance that this company takes while disbursement of those microloans.

So to that extent comparing though you are right in assuming that both have into lending businesses of some sort but SKS growth pattern and IDBI bank's growth pattern obviously are two different way, as the market would look at them.

So I do believe that SKS Microfinance will always have a better PE multiple compared to IDBI or the other banks and probably would have a better market cap on the same earnings and this scarcity premium is going to last for some more time till the time we have 4-5-6 more microfinance companies getting listed on the exchange and the appetite of the institution is getting associated.