Banks remain a value buy for this $60 million PMS fund CEO
Emkay's Chief Investment Officer, Manish Sonthalia, who manages $60 million in funds, HDFC Bank is one of the best-managed large private sector banks, with continually improving valuations.
Emkay Investment Managers continues to favor HDFC Bank as a top choice in its investment portfolio. Speaking with CNBC-TV18, Emkay's Chief Investment Officer, Manish Sonthalia, who manages $60 million in funds, highlighted the bank's sustained attractiveness as an investment opportunity.
Sothalia pointed out that banks will play a crucial role, and are expected to contribute about one-third of the anticipated 16% earnings growth for the next financial year (FY25). The current direction of stock prices indicates either a miscalculation in earnings forecasts or a significant price-to-earnings (P/E) ratio devaluation among major banks such as HDFC Bank, ICICI Bank, Axis Bank, and Kotak Mahindra Bank.
"As the PE (price to earnings) derating continues to happen, this basket or this space continues to remain a clear value buy," he noted.
While there is perceived value in investing in these banks, he also noted that the challenge lies in the heavy domestic institutional ownership of these banks. This limits fresh buying opportunities for domestic institutions. He believes until there is increased participation from retail or foreign investors, these banks will continue to offer value but may face limitations.
Public sector banks (PSUs), on the other hand, have value and less complex ownership structures, and are under-owned, making them preferable for investment.
Discussing the selloff in HDFC Bank over the last week, Sonthalia said, "There was value at ₹1,600, it becomes the deeper value at ₹1,400 and even bigger deeper value at ₹1,300, but it remains a buy."
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According to him, the bank stands out as the best-managed large private sector bank, with continually improving valuations. Despite recent underperformance, Sonthalia remains optimistic, asserting, "So, leave aside the recent underperformance that we have seen in the bank, but it remains a buy."
Also Read | HDFC Bank becomes the first lender to achieve milestone of 2 crore credit cards in force
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(Edited by : Shweta Mungre)
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