Reviving investment cycle to boost profits, Mahesh Patil optimistic on these sectors
The Chief Investment Officer (CIO) of Aditya Birla Sun Life AMC also shared his views on various sectors such as banking, diagnostics, and sugar, among others.
Mahesh Patil, Chief Investment Officer (CIO) of Aditya Birla Sun Life AMC sees a slow yet consistent recovery in the investment cycle. The revival is boosting confidence of the potential for strong corporate profits in the future.
Speaking to CNBC-TV18, Patil noted that capacity utilisation levels across industrials and manufacturing are reaching about 75%, which typically triggers a pickup in the investment cycle. Private capex, he believes, will pick up post elections.
However, he also advised a balanced approach now, noting, "Currently, interest rates remain high in India, and we don't foresee any rapid cuts. We anticipate that rates will stay high throughout the next year."
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He shared his views on various sectors. He pointed out the developments in hospitals and diagnostics, foreseeing a shift towards organised spaces.
The ethanol narrative has emerged as a driving force for sugar stocks, attracting increased interest and reviving multiples within the sugar sector, he said.
Sugar stocks rose over 10% on December 18, after the Ministry of Food reversed the ban on using sugarcane juice to make ethanol. Key players like Balrampur Chini Mills and Shree Renuka Sugars surged around 7.5%, while Dalmia Bharat Sugar saw a rise of 6.5%.
The government had set a cap at 1.2 million tonnes for the amount of sugarcane that could be diverted for ethanol production. Now, that limit has been raised to 1.7 million tonnes. This limit will be reviewed every month.
Patil expects banking stocks to do well. While earnings growth has been decent, high interest rates in India are likely to persist which may help keep the net interest margin (NIMs) from narrowing. He also pointed to the uptick in corporate lending, which had been sluggish for many years.
"So I think banks where the valuations are still fairly reasonable compared to where the broader market is, that I think looks good going forward," he said.
Also Read | Will the PSU bank rally continue in 2024?
On public sector banks, he sees the improvement in recoveries, quality of credit, and increasing retail focus to be the key drivers. Those prioritising technology and emphasising distinctive investments within the PSU banks are likely to stand out, he said.
For the entire interview, watch the accompanying video
(Edited by : Shweta Mungre)
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