How Does TCI Finance Limited (NSE:TCIFINANCE)’s Prospect Stack Up Next To Its Financial Peers?

TCI Finance Limited (NSEI:TCIFINANCE), a IN₨344.34M small-cap, is a financial services company operating in an industry, which tends to be appealing to risk-averse investors attracted to steady revenues, low volatility and high dividend yields. However, more recently, poor management decisions, such as those involved in subprime loans and derivatives, significantly raised operating risk, limiting the industry's investment suitability to those who are less risk averse. Financial services analysts are forecasting for the entire industry, a somewhat weaker growth of 2.92% in the upcoming year . Is the diversified financial services industry an attractive sector-play right now? In this article, I’ll take you through the sector growth expectations, and also determine whether TCI Finance is a laggard or leader relative to its financial sector peers. See our latest analysis for TCI Finance

What’s the catalyst for TCI Finance's sector growth?

Recently, government and overseas regulators involvement has increased to play a prominent role, closely examining and controlling day-to-day business administration of certain companies. In the previous year, the industry saw growth in the twenties, beating the Indian market growth of 13.96%. TCI Finance leads the pack with its impressive earnings growth of 88.02% over the past year. This proven growth may make TCI Finance a more expensive stock relative to its peers.

Is TCI Finance and the sector relatively cheap?

Financial services companies are typically trading at a PE of 21.92x, relatively similar to the rest of the Indian stock market PE of 25.79x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. However, the industry returned a lower 6.12% compared to the market’s 9.58%, potentially indicative of past headwinds. On the stock-level, TCI Finance is trading at a lower PE ratio of 9.45x, making it cheaper than the average diversified financial services stock. In terms of returns, TCI Finance generated 8.44% in the past year, which is 2.32% over the diversified financial services sector.

Next Steps:

TCI Finance recently delivered an industry-beating growth rate in earnings, which is a positive for shareholders. In addition to this, its PE is below its financial services peers, suggesting it is also trading at a relatively cheaper price. If TCI Finance has been on your watchlist for a while, now may be the best time to enter into the stock. Its industry-beating growth delivered may not have been fully accounted for in its shares given its lower PE ratio relative to its peers. However, before you make a decision on the stock, I suggest you look at TCI Finance's fundamentals in order to build a holistic investment thesis.

• 1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
• 2. Historical Track Record: What has TCIFINANCE's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
• 3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of TCI Finance? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.