The Hindu Business Line : Financial services cos in limelight

INVESTORS in stocks of financial services companies, including some of the less-known ones, are creating substantial wealth for themselves, thanks to the sharp upward movements recorded by many of these counters.

A flock of small-cap scrips - AK Capital, BNK Capital and Mefcom Capital, among others - have all turned out to be multibaggers in recent months, triggering talks of a re-rating that is ostensibly waiting to happen in the sector.

These companies have joined the likes of DSP Merrill Lynch and JM Financial, listed outfits promoted by well-known investment banking groups. The stocks of both companies are doing well on the bourses.

Market circles attribute the trend to rising investor confidence in financial services companies, especially to the fact that their businesses are fundamentally turning for the better.

An investor in Magma Leasing, for instance, would have made a neat pile if they had stayed invested for the past one year. The Magma stock, which had seen a low of Rs 22, is now trading at around Rs 170-180 - an eight-fold increase.

Mr Sanjay Chamria, Managing Director, attributes the upside to the performance figures notched up by the company. "Business conditions are positive. These have helped up move from strength to strength."

According to Mr Ajit Khandelwal, Managing Director of BNK Capital, investors have reacted to the potential unleashed by the segment - particularly so in the case of listed stock broking entities.

"Their operations are expanding, a trend that is reflected in their widening client base. There was a time when these were practically not traded. That has changed."

A number of these small-cap counters are listed only on the BSE. Among the stocks that have surged ahead in recent times are Mefcom Capital (Rs 8.95 on Monday), Chokhani Securities (Rs 8.50), and Allianz Capital (Rs 54.95).

Their trading patterns underline one common characteristic: Low volumes. However, each is a big-time grosser. The 52-week lows for Mefcom, Chokhani, and Allianz have been Rs 1.33, Rs 2.10 and Rs 2.60 respectively.

Biggies also ride the wave

FOUR listed financial services outfits - DSP ML, JM Financial, Geojit and Indiabulls - are in the limelight at the moment, courtesy a marked interest displayed by investors in the stocks.

Both DSP ML and JM Financial are currently near their 52-week highs of Rs 875 and Rs 178 respectively.

So is the case with Geojit, a counter that is in the sub-Rs 100 range; its recent high was Rs 106 on the NSE.

Indiabulls, which market sources said has nearly created history with a rapid rise, closed at Rs 257 on Monday, not too far below its 52-week high of Rs 271.

The stock has been scaling up from the level of Rs 22.

IL&FS Investsmart, which listed last week, closed the session at Rs 177, once again giving IPO allottees a solid appreciation. The stock had reached Rs 200 on the day it was listed.

Mr Sandeep Presswala, who heads retail at IL&FS Investsmart, said that investors have warmed up to financial services. "The growth potential has been translated into volumes."

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