Sep 10, 2013 05:50 PM IST | Source: CNBC-TV18

Exit Muthoot Finance, says Rajesh Agarwal

Rajesh Agarwal, Head of Research at Eastern Financiers Limited suggests switching from Muthoot Finance to some of the PSU banks like Andhra Bank, Dena Bank and Syndicate Bank.

Rajesh Agarwal, Head of Research at Eastern Financiers Limited told CNBC-TV18, "Muthoot Finance has seen an uptake in the recent past just because of gold prices going up, but the business model still remains dicey. I would not suggest anybody to hold this stock for a longer term horizon, maybe a trading stock giving trading opportunities, but fundamentally there is nothing to stay in this stock."

He further added, "On valuation parameter it is trading at a PE of around 6. We get a lot of PSU banks which are trading at a PE of less than 4-5, so it is better to switch from Muthoot Finance to some PSU banking stocks like Andhra Bank, Dena Bank, Syndicate Bank which are trading at a valuation which is much lower than Muthoot Finance. They give good dividends and even business model if one compares banking stocks with Muthoot Finance - it is far better. I would suggest a switch from Muthoot Finance to some of the PSU banks."

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