The Hindu Business Line : Indiabulls Financial Services: Buy

The stock is trading at price-to-earnings multiple of 23 times its annualised earnings for FY 06, based on the numbers for the quarter ended June 2005. The valuation is attractive considering the growth prospects for financial services in general, and Indiabulls in particular.

Indiabulls is rapidly scaling up its securities broking business and has been growing at a faster pace compared to that of the industry. It has also now aggressively entered the consumer finance business to scale up operations. The six-fold growth in profits in the first quarter was achieved with contribution from both the stock broking and the financing business. Even without any growth in profits over the quarter ended June 2005 in the subsequent three quarters of the financial year, the stock's valuation will not be demanding.

The price is also attractive considering the valuation commanded by other securities broking firms such as India Infoline and IL&FS Investsmart. Indiabulls' record in growing its business and brand has, however been, better than that of the other firms. Indiabulls is a diversified financial services company that is also investing heavily into property development. Its shareholder fund base will now be close to Rs 1,000 crore, half of which is invested in the property development business.

Returns from investment in property are unlikely to materialise in the next 12 months, though.

Even without sizeable contribution from the property development business in the short term, expected growth in earnings could deliver capital appreciation.

Suresh Krishnamurthy

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