I did some follow-up work on this - based on my rough calculations, the stock was trading at highest P/B of 14+ during peak of bull market in 2008. At that time, MOSFL was primarily a broking and asset management business. Few changes to these business since then:
- Broking side has now added investment banking which, in my opinion, should have similar types of P/B
- Asset Management has expanded into Wealth Management and PE businesses, all of which should have similar P/B
However, new streams of business i.e. Housing Finance (37%) and PE sponsor commitments (48% along with LAS) form a major chunk of total book size.
I have tried to work out a consolidated P/B for the business based on individual estimations for each business as below (I have tried to estimate an ideal P/B for this business - will look to apply margin of safety over and above):
2008 Q2 FY18 Future
Business Equity % P/B Equity % P/B Equity % P/B
Capital Markets 80% 14 9% 10 5% 10 Broking, Investment Banking
Asset Management 20% 14 5% 10 5% 10 Asset Management, PE, Wealth Management
Housing Finance 0% 37% 5 40% 5 Housing Finance
Fund Based Business 0% 48% 8 50% 8 PE Sponsor Commitments
100% 14 99% 7 100% 7
2008 equity % is my own assumption. The P/B values for individual businesses are my best guess estimates (would really help if someone can provide better estimate based on their experience)!