Dipan Mehta: Here are Dipan Mehta’s top three banking picks


HDFC Bank, IndusInd Bank and Kotak Mahindra Bank have considerably larger progress charges than ICICI Bank and fewer

steadiness sheet associated points, Dipan Mehta, Founder Director of Elixir Capital & Member, BSE & NSE, tells ET Now.

Edited excerpts:

It is all greed in the case of ICICI Bank however is it time to be fearful?

It is a transferring prepare and anyone getting on it ought to be ready for common or beneath common returns. It was an excellent purchase a couple of months in the past when there was a substantial amount of uncertainty surrounding the top administration and its general efficiency, recognition and provisioning for NPAs. As and when these uncertainties acquired resolved, we noticed first rate buying and selling rally in ICICI Bank.

But from a long-term perspective, we nonetheless stay fairly constructive on the likes of HDFC, IndusInd Bank and Kotak Mahindra Bank which nonetheless have considerably larger progress charges than ICICI Bank and fewer steadiness sheet associated points. So, whereas ICICI Bank has a pleasant buying and selling bounce for the buyers with a two- to three-year view, I feel the top three banks that I simply named are the very best bets.

In case of Yes Bank, if any constructive information circulation comes so far as top management or high quality of their steadiness sheet together with an RBI report on NPAs come, you might see the inventory spike up purely on account of brief overlaying.

What is your name on metal shares particularly Tata Steel?

We are destructive on metal shares given the type of commodity erosion which is happening. It is finest to keep away from the sector at this level of time.

How are you approaching the crude decline theme? Are you shopping for aviation or paint corporations? Crude is at $60 and the entire dynamic has modified.

There is a buying and selling rally in oil advertising and marketing corporations and one might actually play with corporations like Indian Oil which are accessible at 8% dividend yield. OMCs have to do some quantity of valuation catch-up.

Aviation additionally tends to profit however that’s steadily getting priced in. Overall, crude oil has been useful for Indian markets and it doesn’t matter in the event you should not have a direct 1:1 correlation technique vis-a-vis crude oil.

Any inventory you personal — be it a banking inventory or a consumption oriented inventory and even vehicles — all of them profit from decrease crude oil costs. The complete economic system advantages from decrease crude oil costs. We are not of the view {that a} particular crude oil technique is required at this level of time. These issues reverse fairly rapidly. If crude can fall 30% in a single month, it might go up by 30-40% in a single month as nicely. So allow us to not attempt to resolve on our long-term funding technique primarily based on how crude oil costs are going to maneuver within the speedy brief time period.

I might say that general it’s useful however don’t wish to have any particular crude oil primarily based funding methods.

Is there benefit in shopping for Telecom shares?

There is a lot destructive information circulation in Telecom that any quantity of constructive information might ship these shares flying and you might actually have a pleasant buying and selling rally in Telecom shares. They have been main underperformers and so you might have a buying and selling bounce there.

But if you have a look at a long run view like one thing in extra of a yr — from one yr to three-four years or so — then it’s essential to keep away from Telecom fully. My logic is sort of easy that these corporations with the current enterprise mannequin are unlikely to get the next return on capital invested. From being a excessive ROC type of enterprise, it’s going to be a really low ROC capital intensive enterprise which doesn’t give good returns in the long run as you’ve seen with a number of related Companies. That is level primary.

Point quantity two is the consolidation is technically flawed as a result of there’s a resistance on the a part of the patron to pay for larger and better cell telephony payments. 4-5% right here or there is not going to make a lot of a distinction however to anticipate these corporations to have a 40-50% kind of improve of their common income per person appears extremely unlikely. On the opposite hand, to compound the issues, we’ve got had a excessive diploma of penetration so far as SIM playing cards are involved.

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