.jpg)
2 hours ago
2
In the wake of recent market corrections, attention has turned to Bajaj Finance and Britannia, two stocks that saw notable declines yesterday. ET Now caught up with market expert Parag Thakkar from Fort Capital to get his perspective on whether these stocks present attractive buying opportunities at current levels.
“Two big movers yesterday and we spoke about that and we have delved into it enough but just getting a quick sense from you, Bajaj Finance, Britannia, would these at all be buys for you at these levels? The correction that we have seen on both of those yesterday. Britannia lesser than Bajaj Finance frankly. But give us a sense, are these good buys?” ET Now asked.
Thakkar responded with a cautious stance on high-yielding lenders. “So basically all the segments which are high yielding like MSME unsecured or two-wheeler, three-wheeler those kind of things are troubling Bajaj Finance and so they have brought their AUM growth guidance also down and credit cost guidance is also at the upper end. They reported 2% and they are guiding for 1.9-1.95%. Rather than that I would be betting on stocks like SBI, ICICI, HDFC Bank—those kind of names where you have a very strong CASA franchise.”
He highlighted SBI’s robust performance as an example of low-risk growth. “If you see the results of SBI in depth, current account has grown at 18% YoY and fee income has grown at 25% YoY. Imagine a 44 lakh crore loan book with a credit cost of 39 bps—what a work this management has done, the chairman Mr Setty. So, I am completely a big fan of SBI chairman and I would say that I would prefer such low-yielding, low-ROI banks versus very high-yielding and high price-to-book entities like Bajaj Finance.”
Thakkar emphasized the valuation differential as a key factor. “Bajaj Finance I have a great respect for that company. I had it but we booked some profits. But I would say that at 5 times book versus SBI's 1.1 time book or say HDFC Bank at 2.2 times book, I feel that the risk-reward is much better in SBI, HDFC, ICICI kind of names where you have lent to segments where there is no risk in terms of credit cost and because of your low cost of funds—which is due to the work on current account side and fee income—you are protecting your ROIs and ROEs.”
He added, “SBI is a 15% ROE business available at 1.1 time book, what more do you want? It is a big representative of India’s economy—20% of the loan book, 27% of the savings book, 27% of the mortgage book. Plus subsidiary value—for example, I do not see any analyst saying that SBI has NSE shares worth around 50,000 crore. So, the subsidiary value, which is calculated in analyst models around 250 to 280, I think SBI subsidiary value will be more than 350. So, it is trading at 1.1 time book and 7 PE on FY27. 85 is the EPS, 585 is book value, and Rs 300 or more is subsidiary value. So, I would say the clear answer is that I would prefer SBI over Bajaj Finance.”
On the topic of other earnings updates, ET Now asked about Thermax, BSE, and Tata Power. Thakkar remained cautious, saying, “So basically, I do not have all these three stocks in the portfolio. So, I would refrain from commenting on it. And Thermax, Tata Power—all companies are good, BSE of course—but the point is that from valuation perspective I have not bought these stocks, so I would refrain from commenting on their results. Let us see how they… for example Thermax, this is really a good company, I was also surprised to see the numbers. Let us see what they have to say on it.”
As investors assess the recent corrections, the emphasis on quality banks with strong fundamentals and attractive valuations seems to be driving interest, while high-yielding, higher-risk financials like Bajaj Finance face scrutiny.
English (US)