by Sanat Vallikappen – DNA Money
In a rising market, the less diversified a company’s business is, the more the tendency for its stock to command a premium over listed peers. In other words, investors tend to value a company higher if it is focused on a particular business.
But this scenario, lest it be misunderstood, is true only in a rising market and doesn’t always hold true. At the end of the day, it’s the investor’s view on a company that helps him decide how much he should pay for it, regardless of whether it operates across businesses or concentrates on a niche segment.