Moneyview lists at 62% premium: Should you hold or sell?
What's the story
Moneyview, a prominent player in the financial technology sector, has made its debut on the National Stock Exchange(NSE) with a bang. The company's shares were listed at ₹55 per share, a whopping 61.76% higher than its initial public offering (IPO) price of ₹34 per share. This surge in listing premium indicates strong market acceptance but also significantly alters the valuation landscape for Moneyview's business model.
Valuation impact
P/E ratio soars to 40.05x
The 61.76% listing premium means investors are now paying a much higher price for the same business.
At ₹55, Moneyview's price-to-earnings (P/E) ratio has jumped from 24.76x to 40.05x.
The P/E ratio indicates how much investors are willing to pay for every ₹1 of earnings, and this sharp increase suggests that high growth expectations are now factored into the stock's price.
Market comparison
Peer comparison shows mixed picture
Despite the steep rise in its P/E ratio, Moneyview's 40.05x is still way below the average of its listed peers at 82.41x.
This indicates that the stock is not trading at a premium earnings multiple like some digital-finance businesses.
However, it's important to note that these peer businesses have different models and risk profiles which could explain this discount without necessarily indicating undervaluation.
P/B analysis
P/B ratio also sees significant jump
Moneyview's post-listing P/B ratio has also jumped to 3.50x from 2.16x at the IPO price, while its peer average stands at a high 6.18x.
The P/B ratio compares market value with a company's net worth and is particularly relevant for Moneyview given its lending exposure.
A high P/B indicates that investors are willing to pay more for each unit of net worth, which could be a sign of confidence in future growth prospects.
Investor guidance
Keep an eye on quarterly earnings
Investors should now keep an eye on quarterly earnings to see if revenue and profit continue to grow at a fast enough pace to support the new high P/E ratio.
They should also monitor credit quality indicators such as impairment expenses, Stage 3 loans, and loan-loss trends.
If lending outpaces the company's ability to manage defaults, it could put pressure on earnings.
Market dynamics
Valuation comfort vs growth potential
The post-listing valuation of Moneyview leaves less room for disappointment than the IPO price did. However, its lending exposure also adds credit-cycle risk.
This could make the stock less appealing to investors who prioritize valuation comfort and lower earnings volatility.
On the other hand, long-term investors may still find value in Moneyview's potential growth in digital lending and expanding customer base.