“The high debt levels of telecom companies, but more importantly, 5G and new 5G spectrum regulation is allowing some of the service players to enter this space, which is kind of eroding their position against to all telecom providers whether it’s Vodafone or so that’s a concern, says Chakri LokapriyaDSI and MD, TCG AMC

What’s your view of the whole banking space, post the news we’ve seen in the RBI policy, I think it’s really played along the expected lines, an aggressive stance, but that’s not it, this was totally unplanned and along the way as well as the Governor of the RBI making it clear that more such measures are needed?
Indeed, because oil returned to $125 and rose with no indication of lower oil prices, they were forced to raise interest rates. And strong credit growth is accelerating for the banking sector, but not as strong as it could have been if the war were not there. So in that environment, there’s likely to be a higher amount of fixed deposits which will translate into lower lending, and that will initially help NIMs (net interest margins) for banks. Valuations of all banks – whether public or private – have corrected markedly and front line companies are liking and trading close to 2013-14 multiples.

In this context, as NIMs increase, as credit growth slowly returns, it is not

will come back robustly and PSU banks will also benefit.

is extremely well positioned for the current rise in interest rates. Thus, SBI, HDFC Bank, are the main beneficiaries.

Also read: Market likely to range bound; 3 themes in which to invest

What do you think of real estate? During the RBI Governor’s public address to the nation on monetary policy yesterday, real estate stocks stood out. What are your top picks in this pack?

Look, the stock has corrected significantly, probably around 40 percent odd

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after the resignation of their managing director JC Sharma. It is a good well run company in a good market, basically in terms of Bangalore and Gurgaon, all these areas where it is growing have high IT demand. IT employees are one of the main buyers of real estate from developers, which positions the company well. He looks fine after his correction.

The second is Phoenix. It has a combination of good rental income from its commercial properties as well as a mix of residential, retail and shopping center space that the stock will benefit from as the economy rebounds and the share of shopping center revenue, commercial spaces increase in favor of

. Against this backdrop, interest rates have risen and 90% of India’s mortgage and housing market is tied to floating rates, which means that when interest rates rise, there is an almost immediate increase in IME disbursements.

But even in that context, the new demand is what we’re concerned about, because it’s been muted over the last two or three years, there will be some continued momentum in some names like Sobha, Phoenix and even

which is extremely well positioned after restructuring its balance sheet and reducing its leverage.

What is your outlook for one of the most active stocks we saw yesterday, Bharti Airtel? It’s dropped more than 3% overnight, there’s so much news around Bharti Airtel – its need to raise tariffs, the 5G auction that hasn’t happened yet, the family of promoter Mittal seeking to buy out the stake of its Singaporean partner Singtel by raising funds.
First, telecom companies have high debt levels, but more importantly, 5G and new 5G spectrum regulation is allowing some of the service players to enter that space, which is kind of eroding so their position against all telecom providers – be it Bharti Airtel or Vodafone and that is a concern.

Second is the amount of the spectrum itself. Those are the two main concerns and prices have gone up but not in line with market expectations. When you add it all up, that translates to a lower-than-expected result for these companies, but the current 5G spectrum auction until the auction terms become slightly clearer. It will continue to dominate the stock.

What about ? The market fears that if Yashish Dahiya, the founder, sells shares for tax planning purposes, he may not sell any more. He talks about a one-year lockdown. How do you see this space?

The promoter, the founder obviously has to exit and monetize the holdings, but in the current market conditions, where they have gone public at high valuations and the valuations have been corrected, if the founders exit some of their holdings for tax planning, market conditions also add to the sour mood, and it accentuates all actions by the founders.

It is therefore a very difficult conundrum to overcome, but it is clear that any sale by founders under current market conditions will be viewed negatively by the market.

is a very fancy story from the end of 2020 to around 2021 and everyone said the best was already baked into the price and then we saw an underperformance in which M&M caught up. But now, given the issues with Motown, where do you expect the gains to concentrate?
M&M, Escorts and

– all of these companies will do well. In agricultural equipment, there are investments from all these companies for modernization. VST Tillers has entered into an alliance with a French company that supplies tillers for the agricultural industry and for slightly larger farmers. Escorts, due to its Japanese collaboration or participation in the company, provides access to a very advanced agricultural equipment space that has somehow underperformed. Sales have underperformed for the past two years.

Whether it’s VST Tillers or Escorts, Escorts were technically held back due to the Japanese participation that was coming into the business, but on a fundamental basis, VST Tillers as well as Escorts look good . M&M is a sum-of-parts story and clearly the other parts of M&M are doing well too, so that helps with that as well. I think this space looks good.