Two sectors Sudip Bandhopadhyay is betting on
"If we have decent monsoon progress, that definitely would cheer the market. Global trade war-related noise which we get to hear on a daily basis obviously will keep us on tenterhooks," says Sudip Bandyopadhyay, Group Chairman, Inditrade Capital, in a conversation with ET Now.
ET Now: We are done with elections, RBI policy as well as earnings. What is left is now the Budget. So what do you think is going to be the next big trigger for the market?
Sudip Bandyopadhyay: Couple of factors will be at play. One is, of course, the progress of monsoon which will be eagerly watched over the next couple of weeks. If we have decent monsoon progress, that definitely would cheer the market. Global trade war-related noise which we get to hear on a daily basis obviously will keep us on tenterhooks. It is a matter of grave concern for the global economy and definitely, India is going to be impacted one way or the other depending on how things move on the trade war front. But I will also point out one more local issue which is the entire NBFC liquidity crisis. It is something which was not warranted. I strongly believe that generally, this is not a solvency issue. It is a question of liquidity. There is a problem of liquidity and that is creating all kinds of distortions. If we figure out a way of providing some liquidity to the beleaguered NBFCs, things will become much smoother. We hope and pray that things move in that direction over the next couple of weeks.
I can talk about DHFL. It is a solvent company. They have sold multiple businesses for very good consideration whether it is their Aadhar Housing Finance Company to Blackstone or Avanse the education loan company to Warburg. The money is going to come. They are awaiting regulatory approval which I think is a done thing. There is no reason from the regulator to refuse its approval but it does take time. In the interim, if they are provided with liquidity, they can meet the obligations and the panic and chaos which is in the market will disappear.
ET Now: You mentioned that DHFL is trying to sell its assets and essentially shore up cash. But do you think that is going to be enough for DHFL when the troubles are only mounting? We do have some efforts being taken by the government, by the RBI as well as we heard Shaktikanta Das speak about that liquidity framework. But do you think that there is a chance DHFL may survive through this?
Sudip Bandyopadhyay: Even today they are generating significant cash flows. They have gone and repaid, met all their obligations over the past six months since the IL&FS crisis started and DHFL started getting hit. They have sold systematically their other businesses to generate cash to repay the lenders. They are moving in a very systematic way. I think they are trying to do the right thing. It is extremely difficult to say from outside that whether they will survive or not but the fact remains that they have done a lot of good work over the last six months and tried to ensure that their obligations are met. At this stage to panic probably will not make sense from the point of view of investors. It does not help anybody to panic and start selling. It will only become worse. I would say the same thing applies to the lenders. Panicking today and taking some drastic action will only make matters worse them. So there is a need for us to be patient. If you are an investor in DHFL, if you are a lender to DHFL, you have to wait and watch, maybe watch very-very carefully but panicking does not help and exiting at a distressed value does not help either.
ET Now: Do you think this deal for Embassy as well as for Indiabulls is a win-win deal?
Sudip Bandyopadhyay: This is an excellent move on part of Indiabulls. They definitely want that merger with Lakshmi Vilas Bank going and they are trying to do everything possible to ensure that the merger is on track and receives the regulatory approval. They have their challenges. They had earlier applied for a banking license and did not get it. So obviously they need to do a lot of things to ensure that they achieve the merger this time. Indiabulls Housing Finance is a good company. If you forget all these transactions and look at the housing finance company, it is a great company. As far as the Embassy Group is concerned, with the backing of theRead More – Source