Within the banking space we will watch out for IndusInd Bank as well because the bank has announced fund raising through debt securities as high as Rs 20,000 crore. Fundraising is a normal exercise for any banking major, but of late, the numbers have been quite high. We have seen a QIP from SBI. IndusInd Bank is reeling under pressure, the business is not looking that great. Does Rs 20,000 crore of fundraising change anything for IndusInd Bank?
Nischal Maheshwari: It is going to be a positive one given that if they are able to raise this kind of money — not that they need this kind of money immediately – it is definitely going to shore up their capital and that will give comfort to a lot of shareholders.
But the bigger problem with IndusInd is once the new management comes in and if there is a bit of kitchen sinking, in anticipation of that, they are planning to raise this kind of money. It is a combination of debt and equity. The split is not known at the moment but it will be seen as a positive one.
Where are you seeing the NBFCs positioned in the financial pack right now? What are the expectations from Bajaj Finance as well as the slightly smaller NBFCs, and not from the Nifty 50 stocks?
Nischal Maheshwari: NBFC should do better than the banks for the moment, at least for the next two or three quarters because interest rates are coming down. Most of the NBFCs are bulk borrowers in the market and that is why the cost of borrowing is going to go down. But given that most of them operate in a niche, the lending will continue. So, NIMs are going to improve for NBFCs and that is why it is going to be a positive one for NBFCs. Bajaj Finance continues to do pretty well, but the issue is the valuation. It is five or six times price to book value and that is a very aggressive and pretty steep valuation. So, I would avoid it.
Any takes on the power sector right now – power generation, or other segments of the power sector? What is your view on the space?
Nischal Maheshwari: I have been pretty positive on the T&D side of the power sector because there are two major drivers. One is solar power and the evacuation of solar power. Unlike thermal power which has large plants, in the case of solar, it is pretty well spread out. So, you need to evacuate that power and that is why the transmission and development lines are required. The second one is that our system now consumes much more power and so the transmission lines need to be upgraded. That is why we are seeing most of the newer lines coming from 440 to 750 to 820 KVs. These are the two major reasons and transmission and distribution is the main area with a long runway.
