Why Saurabh Mukherjea isn't losing sleep over stress in HDFC Bank, Kotak and Bajaj Finance
Three financial giants HDFC Bank, Kotak Mahindra Bank and Bajaj Finance, which is almost half of PMS fund manager Saurabh Mukherjea's Kings of Capital portfolio, are having a tough time. But the star stock picker isn't the one to switch sides when the going gets tough.
«If you find a high-quality company where you have great faith in the quality of the promoter, great faith in the management, and the shares have come off to low valuations, you double down,» Mukherjea told ETMarkets in an interview.
He also lists three reasons why Kotak Mahindra Bank, which has lost its valuation premium over regulatory and top management exits, will bounce back. Edited excerpts from a chat with Saurabh Mukherjea, Founder and Chief Investment Officer of Marcellus Investment Managers:
Three stocks in your portfolio — HDFC Bank, Kotak Mahindra Bank and Bajaj Finance — have been in the news for RBI’s ire. How big do you think regulatory risk can be for lenders?
Saurabh Mukherjea: With highly-regulated industries you have to accept the smooth with the rough.
The smooth aspect of it is that new competitors find it hard to enter and so you get high ROEs for the incumbents as seen in Bajaj Finance and HDFC Bank. If you're a competent, well-run company in a highly regulated sector, your return ratios are very high.
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