Banking and financial space looking good; consumer biz could face downgrades: UTI’s Vetri Subramaniam

Amid rising geopolitical tensions and commodity prices shooting through the roof, businesses are grappling with their fair share of challenges. Now, with earnings season around the corner, investors are keenly watching for cues on what could and could not work for the markets.

In an interview with CNBC-TV18, Vetri Subramaniam, Chief Investment Officer, UTI Asset Management Company, said that Nifty could face challenges in achieving 18-19 percent earnings growth. He explained that consumer-facing businesses could see downgrades but he expects commodity producing companies to do well. He also stressed that he is worried about the impact of inflation on both growth as well as demand.

On the financial and banking space, he said that it is dominated by 8-9 lenders. He believes the space is looking good and he remains optimistic about credit growth picking up from hereon. He opined that the HDFC group merger was logical, however, he explained that he is unsure of more consolidation in this space.

He said, “I do not think it dramatically changes the picture. I do not think it also causes more consolidations to happen. I think we need to keep in mind that this consolidation was also driven by the fact that at some level, there were issues related to one company being the promoter of the other, having to continuously pump money to maintain its stake and they really simplified their own ownership structure through this; that was perhaps an important fact that there would be synergies for the combined entity.”

On pharma stocks, he said that they are trading at mid-cycle valuations. He mentioned that he positive on the sector.

“The pharmaceutical pack is sort of more mid-cycle in terms of valuation, but over there, we think there are some strong growth trajectories that some of the companies are demonstrating and that's an area where we tend to feel quite positive,” said Subramaniam.

Watch the video for the full interview.