We were talking about RIL joining the $100 billion market cap club but do you think Rel Jio can stall those plans?
Reliance will do well and R-Jio will also do well. In this quarter, there was a revenue run rate slowdown for Jio, but if you look at the other telecom incumbents — the competitors are not in a great shape in terms of their balance sheet and the leverage.
Reliance is in a very strong position and the quality of service is as good or better depending upon the circle. Against this backdrop, a company which is holding on to its market share is more important. I would see that Jio will do well and as a result Reliance as a stock will also perform well. Its other businesses like petchem are doing extremely well and the stock overall does very well from here.
With the exception of ICICI Bank, private banks have started rising and PSU banks have stopped falling, given that the Reserve Bank of India is aware that the provisioning norms will have an impact on banks balance sheets. Is a strong trade possible in an SBI, BoB or for that matter Union Bank?
Two things. You just have to step back a little bit on the loan growth for corporate banks including ICICI and Axis is close to 0% — there is no growth. On the other hand, for the retail banks, it is 15-17% which means there has not been any accretion to their bottom line.
They are loss-making companies. As far as PSU banks are concerned, RBI has stepped in and allowed them to spread the losses a little bit for the following quarters. More than anything else, that depends on two factors. One, the 12 NCLT cases resolution and second, a large amount of kitchen sinking of the NPAs in this quarter and next. All this is well-known in the marketplace. Against this backdrop, as long as the new NPL formation slows down, the stocks will do well from here because the valuations are cheap.
Do you also believe that ICICI Bank is perhaps a better bet than Axis right now?
Both the stocks will continue to do well because they are facing very similar situations. Both are likely to see new CEOs. In the case of Axis, new CEO search has already begun. ICICI is probably going that way. Axis has kind of put out all its NPAs in this quarter. We hope ICICI will do the same but the June quarter will continue to be of the same trend and there will be more bad results. Against this backdrop, it is a question of who is the new CEO and whether the new CEO is growth oriented or not. In terms of bad news, as long as no new things emerge, pretty much all is known about the quality of the book.