Given that the big event seems to be out of the way now, what is the spotlight going to be on? Will it be on SBI that exceptional loss clearly has been a big dent to the profit?
Well, you will have to take it with a pinch of salt that SBI, actually the results in the last two-three quarters have not been as good as the other PSU banks namely Canara Bank, PNB and Bank of Baroda. That is why I think SBI has actually not been able to scale new highs. So I think it will continue to be in a little range bound. We have to understand that the pre-provisioning operating profit was above sentiment, but maybe this was a one off. However, like I said, maybe the sheer weight of being such a large heavyweight will keep it under check. And I think today it could be a little bit weak . But if you have a longer term view, then definitely State Bank is one PSU bank where long term money should find its way.
However, what has happened is that the market has been a tale of two cities. If you saw on Friday also, it is all about PSU, PSU, PSU, whether OMCs, whether railways, whether energy, whether banks. And on the other hand, large cap banks are actually big time underperforming. How long this continues, either one will give way. Maybe, we see a sharper than expected correction. But like I said, now the time for easy pickings is gone. So you have to be a little careful. State Bank may have set the tone that low cost deposit, low cost dims are here to stay for another two quarters. So we will wait for their language. But presently, I think State Bank will weigh down the Bank Nifty.
I mean, the question on everyone’s mind is, A, of course, there are a lot of loose ends, which I guess the management needs to answer, given that the regulator is buckling down on them. But what do shareholders do?
It is a really difficult situation to gauge. The management has come out with their perception. You have had a big block deal take place. But I still think that the underlying business has got dented and till they do not come out with clarity on how they have to perform. Look, the RBI is the largest supervisor on banking and they cannot but come out with such a strong statement unless there has been some impropriety as far as, management goes.
So actually, we are invested in it and it is a painful proceeding that you cannot exit because the problem has been two circuits. So we will wait for more clarity, what the management suggests, what the outlook is and how they are going to handle this. Their parent business, which is a low revenue earner, will continue, which is what was. It is the lending business where they had actually garnered more market share. They were launching products which were extremely positive. Now that will take a dent and that is something which only time will repair. There is enough value if you are a long-term value investor but in the short run, there are so many other stocks where you can replace this. So we will wait for more colour from the management but it is painful right now.Let us also get in your view then as to how you are looking at the outlook when it comes to stocks like Delhivery, PB Fintech. We did see pretty promising earnings coming in, profitability earlier than expected, festive season adding to the boost. How are you looking at this entire mix of these platform companies?
So luckily for us, we are also invested equally as in Paytm in Zomato and PB Fintech. And PB Fintech sounded extremely optimistic. They have kept to their guidelines. In fact, they have preceded their profitability. And if they are talking of FY27, the type of numbers of 1000 crores, then I am very, very optimistic on this company. As a disclosure, this and Zomato, both are in our portfolio. It is making up for the pain of Paytm. But we continue to be very long term positive on PB Fintech. We think all their verticals, all the business prospects are extremely positive. The management is extremely positive. And it is a well-run machine, which is slowly but surely gaining momentum. Delhivery, we do not have. I cannot comment on that. But I would definitely comment on two stocks, which I recommended. JSW, which I think is a very, very strong proxy to strong steel prices and Indigo. Indigo numbers are very, very sweet. And if you recall, around 2780-2800, I have been suggesting Indigo will come out with very good numbers. The stock has reacted very, very sharply on the upside. And ride the play because I think Indigo, as far as local, air travel, the marriage season, the religious Ayodhya, they have got a booking till March. All that will play out handsomely because of their yields rising.
But news this morning, pretty much in every newspaper, that it is actually Hyundai, which is now looking at an India IPO. It is going to be the mother of all. What do you think it is going to mean for the competitor that is Maruti?
Well, more dishes on your plate for the Indian investor. I think Maruti is the most well run oil machine you have seen since its listing. The return manifold have been extremely positive and Maruti is a pure play on Indian demographics. And if Hyundai comes there, they will be definitely, we know the competition is there in the lower end segment. Hyundai is a very, very popular brand. I think it will be one of the best IPOs in the present space, depending on the pricing. But remember, all this comes at 22,000, where there are no free lunches. Any little macro, micro change can alter decisions. There is too much of Bonhomie, which I have, my experience tells me that we are in a very-very overbought space as far as the mid-cap and a lot of the other stocks which are running like there is no tomorrow. So be watchful, take some money off the table, wait for good IPOs, invest in them but stay invested in Maruti. Maruti and Ashok Leyland are two of our topics. We continue to be very positive on these two stocks on the auto play.
What are you deciding to do when it comes to an L&T because there has been a pause to the up move and we have seen that be a little bit, perhaps more prolonged than one would have anticipated. Good time to buy in, wait it out. What should one do?
L&T has doubled in the last six months. It has been tripled in the last one year. What can you ask more of that? It is the best proxy play on infrastructure with the hydrocarbon, electrical, and engineering being the forefront. Results, as good as they come, we will see profit booking because the prices have already priced that in. I would expect consolidation and definitely some accumulation over a period of time. But like I said, now most of the stocks are priced to perfection and you have to be very-very watchful because the side counters, which are running up are making you extremely feel missed out. But I think the broader market till banks do not perform, there is going to be some weakness which can creep in. I do not rule out a sharper than expected correction in the next fortnight. So like I said, L&T will be part and proxy of that since all good news was in the price when the results came. Results were in line, but expectations cannot meet everything from corporate. So buy on decline or doing a SIP is an ideal idea, but do not chase prices.
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