The implications of the banking sector over the commercial sector having a p/e multiple of 42% and 73%?
Hi, if analysts observed that the ratio of the price-earnings multipliers of the banking sector over the commercial sector has been between 42% and 73%; what are the implications (if any) for the banking industry?hope someone can help interpret this! happy new year!
Answer
I wish i could. i have noticed that. i think the reason is this. investors are expecting the banking sector to grow about 50% faster than the rest of the economy. they also expect that the banking sector will have more stable earnings performance. think of it this way. with the indian economy growing so rapidly and with all the construction that needs to be done, who stands to benefit the most. the answer is the portion of the economy that is going to finance the growth.
