The new craze

NBFCs have seen a great run in the stock market on the back of strong loan growth in areas where traditional banks have shied away from and on improving spreads. So great has been the run of NBFCs that a number of them have actually doubled investor wealth in the last one year alone. More recently, a lower interest-rate regime has helped NBFCs improve their net interest margins. Higher incomes in turn have seen valuations move up from their 10-year average of 18x to 24x. Figure 3 illustrates how NBFC valuations have moved up in the last decade. The 10 most expensive NBFC stocks today command a premium of 34 times earnings - nearly double the rate that the same stocks have traded at trad