India Stocks: Bank Nifty Valuation, The Long View

Friday, December 05, 2008

 (click on table to enlarge)

This table provides my forecasts of fair value prices for the components of BankNifty based on assumptions in my post BankNifty offering good value.

Overall, the BankNifty is 26% under-valued at this a time of extreme stress and volatility this is expected.

However, two stocks stand out as over-valued:  HDFC Bank and Kotak Bank.  Due to HDFC Bank's lack of housing loans I have reduced their losses to one years earnings...despite that there is a substantial over-valuation to peers.

Significantly, despite the dramatic decline of ICICI Bank over the past year, its price is about at fair value!   It is the Public Sector Banks that stand out as providing significant upside over the next few years.

Of course there is the humorous side in USA and Europe;  Buy a Toaster, Get a Bank

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