Renowned market expert Sandip Sabharwal has raised significant concerns regarding the current valuations of Bajaj Housing Finance and Ola Electric, describing them as unsustainable and unjustifiable. According to Sabharwal, these prices are wildly inflated, especially when compared to more established financial institutions that are trading at much lower multiples. He warns that these inflated valuations could pose a risk to investors in the near term.
Bajaj Housing Finance: Overvalued and Frenzied Trading
Sabharwal pointed out that Bajaj Housing Finance is trading at valuations that are “crazy” and disconnected from its underlying fundamentals. He noted that other large, diversified financial companies in India are trading at half or even a third of Bajaj Housing Finance’s current valuation. “There is no logical way to justify these price levels,” he stated, attributing the surge to frenzied trading in a limited-float stock, which often leads to inflated prices.
Ola Electric: Losing Ground Despite Soaring Valuation
In a similar vein, Sabharwal expressed his concerns over Ola Electric, which has also been trading at what he considers unjustifiably high levels. He emphasized that while the company is still enjoying investor hype, it has been steadily losing market share every month, particularly in the highly competitive electric vehicle (EV) market. Sabharwal cautioned that the company’s operational struggles, including its declining market share, raise serious doubts about its ability to maintain such high valuations in the future. “This is a bubble waiting to burst,” he warned.
Broader Market Context and Demand Moderation
Sabharwal also commented on the current state of the broader market, particularly in the four-wheeler passenger vehicle sector. After experiencing a period of relatively strong demand, the market has entered a phase of moderation. Sabharwal noted that the demand is weakening across the board, which could impact not just the auto sector but also other industries linked to consumer sentiment. He added that a revival in demand could hinge on two factors: the upcoming festive season and the possibility of the monetary policy being eased by the Reserve Bank of India (RBI).
Will Demand Rebound?
Despite the slowdown, Sabharwal acknowledged that there is a chance for demand to rebound, particularly during the festive season, which typically drives consumer spending. However, he stressed that this revival would likely be temporary unless the central bank takes steps to lower interest rates and stimulate growth across various sectors. “We need to see if the festival season or an easing of monetary policy can bring sustained growth,” he said.
Investor Caution Advised
Sabharwal concluded by advising investors to exercise caution when considering stocks like Bajaj Housing Finance and Ola Electric, whose valuations are currently driven more by speculative trading than by solid financial performance. He warned that these stocks could face a sharp correction once market euphoria subsides, and the true fundamentals of the companies come into sharper focus. “Investors should be mindful of the risks involved in chasing such overvalued stocks,” Sabharwal advised, emphasizing the need for a balanced, long-term investment approach.
In summary, both Bajaj Housing Finance and Ola Electric are trading at unsustainable levels, and investors should be prepared for potential volatility as the broader market continues to evolve.