Axis, ICICI and Yes Bank to perform well in medium term: Ajay Bodke, Prabhudas Lilladher
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Ajay Bodke: If one is betting on a revival in investment cycle, the banks that have gotten severely drubbed are essentially Axis Bank, ICICI Bank and Yes Bank. If one is willing to take a medium term perspective, the corporate focussed banks are the ones which are going to see the maximum reduction in the provisioning levels and also the upgrade in terms of the assets which have been classified as NPAs, so as and when the interest rate falls, economic revival will happen. It is the retail focussed banks which are trading at significant premium to the corporate focussed banks, for instance, HDFC Bank is trading at 3.2 times price to book FY17. IndusInd Bank is trading at 2.6 times price to book FY17, whereas ICICI Bank is trading at just 1.9 times FY17 price to book. Axis would be slightly higher at around say 2.1 times and Yes also will be around the same levels.
So the narrowing of the premiums will happen and that is why we believe that ICICI Bank, Axis Bank and Yes Bank as a pack should be looked at from the medium term perspective for investments. Also in the NBFC side, Shriram Transport, a company which has extremely strong franchise in second hand financing of trucks has seen hard times because of the MCV, HCV cycle not doing well last year but one is seeing strong growth in the primary sales of MCV, HCV from April to July, so one should look at an exposure into Shriram Transport from fundamental perspective.
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