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PSU banks entering a phase where NPAs have peaked out, says Nippon India MF’s Sailesh Raj Bhan

Updated : December 27, 2019 11:06:33 IST

The valuations of public sector undertaking (PSU) banks and other PSU businesses are more attractive than where the average market valuations are, said Sailesh Raj Bhan, deputy CIO-Equity Investments, Nippon India Mutual Fund, in an interview to CNBC-TV18.

He further said that it’s hard to ignore the fact that PSUs are trading at very attractive valuations.

According to him, PSU banks are entering a phase where non-performing assets (NPAs) have peaked out.

Talking about auto sector, Bhan said, “When the correction happened about a couple of months back in the auto space, valuations there were reflecting as if there is no growth beyond next 3-4-5 years.”

“Underpenetration is high in India in terms of passenger cars and there is a huge replacement cycle yet to unfold in India. So given the prospect of the sector and where valuation stand, where companies have reported better margins in a worst quarter and with an improvement of liquidity in the system in the next 12 months this sector is a good consumer discretionary sector,” he added.

Speaking about the pharma sector, he said the sector is showing signs of improvement.

“Calendar 2020 appears to be a very good year and importantly, secular business is getting at reasonable prices and growth is returning. So it’s possible that the sector sees earnings growth in excess of 12-15 percent from hereon and possibly could accelerate further given the cost measures which these companies are taking,” Bhan added.
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