Saurabh Mukherjea: Those chasing company lenders might burn their cash

Posted On Aug 17, 2021 By admin With Comments Off

MUMBAI: Over the course of the past one year, investors have been constantly showed more wish for banks that are perceived to be better ranked from the impending capital expenditure thunder in India.Analysts and asset overseers alike have been raving about the potential for loan growth for corporate loan-focused banks in the country as the government expands its fisc to boost infrastructure spending and private sector capex makes off after lying inactive for close to a decade.Shares of corporate loan-focused banks such as ICICI Bank and State Bank of India have risen 74 -1 19 per cent in the past year as against 37 -4 7 per cent rise in stocks of retail lenders like HDFC Bank and Kotak Mahindra Bank.Saurabh Mukherjea, benefactor and manager investment officer at Marcellus Investment Manager, however, says investors chasing after banks with more corporate lending faces will see their coin blow in their face.Speaking at an happening hosted by PMS AIF World, Mukherjea seemed irked by the issues of the absence of stocks like ICICI Bank and SBI in the PMS’ King of Capital portfolio, a selection of stocks focused on the financial services sector.“We are not going to invest in banks with low quality governance, history of distorted boardroom traditions. If you want to make money in the short-term from inadequately character banks feel free to burn your fund but we will take no part, ” Mukherjea said in response.Much of the underperformance in HDFC Bank and Kotak Bank has been driven by selling from foreign portfolio investors over the past four quarters. At the same time, much of the additions in ICICI Bank and SBI have been driven by FPIs and retail investors.As is always the case, Mukherjea indicated his suit eloquently, but with an underlying ability of frustration perhaps emanating from the underperformance of the Kings of Capital portfolio to the Nifty Bank’s Total Return index in three out of the first four months of the current fiscal year, as per revealings made to SEBI.Mukherjea argued that data over the past five decades from world’s 50 largest economies have shown that as GDP per capita of an economy increase, the share of retail lending in total credit increases proportionally.The resource overseer further said lenders part of the Kings of Capital portfolio do not necessitate strong GDP growth to deliver as they are continuously grabbing market share away from capital-starved state-owned lenders.“Corporate capex is not going to be the large-hearted theme for the next many years as new-age companies do not borrow from banks, it is retail credit that is going to be the large-hearted theme for the next 20 times, ” Mukherjea said.In corporate lending, spreads are pinched as large-scale borrowers have much larger bargain power than a retail borrower. “So if you want to bet on a banker making money from Reliance Industries or NTPC you are welcome to but for me there are other ways of making money in this market, ” Mukherjea said.