Valuation premium to sustain for Bajaj Finance stock: Nitin Aggarwal

economictimes.indiatimes.com:

«This quarter, of course, is going to be important because in last few quarters, margins are moving one way up for the sector. And we think that this trajectory is now set to reverse and we will begin to see some moderation in margins for the large private banks and some of the select PSBs also,» says Nitin Aggarwal, MO Institutional.Let us just talk about the overall outlook within the financial space because the key theme at play in FY24 is expected to be NIMs and spread compression. How much of that is really playing out? Who do you see as some of the key winners within this environment?This quarter, of course, is going to be important because in last few quarters, margins are moving one way up for the sector.

And we think that this trajectory is now set to reverse and we will begin to see some moderation in margins for the large private banks and some of the select PSBs also. And thereafter, we expect this fall to accentuate in the second quarter when the re-pricing will likely be at its peak for many banks.In this environment when right now everybody is fighting for CASA, fight for liability, who do you think will win this war?It is going to remain a tough fight.

While if you look at the gap between credit and deposit growth, it has narrowed already and we have seen some pickup in deposits and likewise some moderation in credit growth. And the forecast for the year is for a continued moderation on the growth front.

But given that the CD ratios for the system is already elevated and there is limited liquidity that banks are now having on their balance sheet. So therefore to fund the growth, the deposit mobilisation is going to be very important, and which is where the large banks are relatively better placed to raise