BFSI Rules

Five out of six debutants in the top 100 rankings are from the financial services sector.

- Anand Adhikari

FOR DECADES, commercial banks – representing the financial services industry – dominated the market cap game at the stock market. The journey started from public sector banks (PSBs) and later shifted to private banks. As a result, in the past decade, the market has seen wealth creators such as HDFC Ltd, HDFC Bank, Kotak Mahindra Bank and SBI emerge in the Top 10 league, rubbing shoulders with the likes of Reliance Industries, TCS, ITC and HUL. This feat was achieved in part because of more institutional investors reposing their faith in these companies. But this pecking order is set to change in the next decade as new financial services companies are debuting at Dalal Street.

In the past two years, the life insurance industry, which earns close to 2 lakh crore as annual premium, has made its debut with three listed players – HDFC Life, SBI Life and ICICI Pru Life. If state-owned LIC alone were to come up with an initial public offering (IPO), with assets under management of over 30 lakh crore, it would top the market valuation charts. Similarly, the general insurance industry, with annual premium income of 1.50 lakh crore, has opened its account in the market with ICICI Lombard and state-owned New India Assurance Company. The re-insurer GIC Re, too, had a successful debut. More recently, the market saw two asset management companies (AMCs), HDFC Asset Management and Reliance Nippon Life Asset Management, get listed. The micro finance institution turned full scale bank, Bandhan Bank, and small finance banks have made an entry in the stock market.

“These new segments of financial services have a long history of profitable operations. Investors are happy to own these stocks,” says Harendra Kumar, MD and Head-institutional equities and global research at Elara Capital. In