Financial groups: Focus shifts to their ability to boost parent's valuation

While lack of clarity on outlook of insurance business has weighed on valuations of parent firms, retail loan growth and fee income need to be closely watched

Not long ago, even as the core business of financial conglomerates such as Housing Development Finance Corporation (HDFC), State Bank of India (SBI), and ICICI Bank was doing well, the Street had turned increasingly bullish on their subsidiaries and how their contribution would boost the overall valuation of their parents.

While some Budget proposals may have cast a shadow of scepticism in terms of the future performance of subsidiaries/other businesses and their ability to contribute to their parent’s stock valuation, the jury is out on this.

Among key announcements of the Budget is removal of tax exemptions, including on home