Prefer Axis, ICICI among largecap banks; midcap banks not a favourite: Sandip Sabharwal
Sandip Sabharwal, asksandipsabharwal.com, says, “there is no gold at the end of the rainbow for REC, PFC and all these companies. Nothing much has changed for them. It is just that there is some euphoria in the PSU stocks. So can it last? Since the overall equity view for the next two years is still constructive, it could last, but this kind of outperformance might not sustain.”
Is private banking, the large two, three names, more like a no-brainer trade now? They are cheap, they have not participated, nothing is wrong, underlying bullishness of the economy is going to only help them. Is Kotak Mahindra Bank and HDFC Bank more like a must-have or go-to trade immediately?
HDFC Bank has underperformed after having a run-up post the merger approval. Now in the near term, it should do reasonably well, given that ICRR uncertainty has been reduced. Now, we need to see the actual impact of the merger on the margins over the next one or two quarters to finally say what kind of mojo it can retain and come back with.
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Axis Bank and ICICI Bank are better placed because they do not have those merger issues to deal with. In the near term, because HDFC Bank underperformed so much, we could see some outperformance, but longer term, I would prefer Axis or ICICI. Kotak, despite the severe underperformance, still is much more expensive than all the other banks.
Where do you think there is margin of safety and enough earnings visibility in the mid-cap banking space?
In the overall financial space,
