Kotak Institutional Equities will prefer larger banks that can withstand COVID-related challenges, MB Mahesh, an analyst at the broking arm of the Kotak Mahindra Group, told CNBC-TV18.
“The way you see COVID unfolding from an impact perspective, you will see a situation where the asset quality concerns are reasonably higher at the self-employed segment, a bit more on segments where there is a reasonable amount of cash collection which needs to be done. So, in that context, it’s hard to build a position around portfolios where those segments are risky and hence those lenders who have those portfolio to be risky as well. So it makes a lot more sense to remain with the top tier names,” he said.
According to him, if housing does well, Axis Bank and ICICI Bank will not surprise negatively. “ICICI and Axis Bank have a relatively higher share of loan book which is sitting on the retail side and more specifically towards secured loan book which is housing and housing as a portfolio should hold up far better. Therefore, this time around it’s quite possible that if housing does well then ICICI and Axis Bank should not surprise negatively as much as they have done in recent years on the negative side. So that’s why we have a stronger positive rating on these two banks,” said Mahesh.
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