This is the beginning of a multi-year investment cycle and we will see positive results of the government’s measures taken over the last few years, said Sanjeev Prasad, Managing Director, Co-Head of Kotak Institutional Equities on Tuesday.
Speaking about the Union Budget 2021, Prasad said,
“The budget also was fairly sensible, fairly credible set of numbers both on the revenue side and also on the expenditure side and the more important thing is the continuous focus on the supply side reforms.”
The government has been doing the right things for the last two years on the reforms side, Prasad said,
“Of course FY22 numbers will be pretty strong from an earnings perspective, but the market is looking beyond that and focusing on the fact that the government has been doing the right things in the last one and a half, two years in terms of reforms on the investment side which will kick start investment cycle so the hopes are high.”
On banks, he said, “It is a combination of fairly strong results which companies have reported, if you look at the banks there were a lot of concerns about the potential increase in NPAs and credit cost but looking at numbers which most of the banks reported the third quarter looks like things are pretty much under control.”
On NBFCs, Prasad said, “We have been positive on most of the NBFCs the smaller ones. In the mid-cap portfolio, we have a bunch of NBFCs over there starting with Cholamandalam Finance, Mahindra & Mahindra Financial Services and Shriram Transport Finance actually their valuations are reasonable even after the run-up which we have seen barring Cholamandalam Finance is well above its pre-COVID price to book valuations, others are still on the reverse side.”
Given the CV segment is doing better, we like NBFCs in the CVs financials space, Prasad said.
“The good thing is at least commercial vehicle cycle seems to be doing fine if you look at the collection efficiency data reported by CRISIL. So at least the CV cycle is doing fine so that is why we like Cholamandalam Finance and Shriram Transport Finance among the CV financials along with some of the other NBFCs.”
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