Banking sector to report good growth this earnings season, says Valcreate Investment Managers

The banking sector is likely to report good numbers this earnings season, said Rajesh Pherwani, founder and portfolio manager at Valcreate Investment Managers, adding that the DCB bank's poor performance was one of the exceptions.

“There has been higher delinquency in the commercial vehicle (CV) sector and the rural side of the economy and that is showing up in the numbers of DCB Bank. Growth also has kind of been in-line with what people have expected. So, on DCB, I think it has been basically disappointment in numbers, but having said that, the good ones are going to continue to show good traction and numbers. There are banks where these issues are not likely to show up in a big way. So, DCB might be a one-off in the smaller banks, but there are other banks where you will see them tiding over these issues in a much better manner,” he said in an interview with CNBC-TV18.

Talking about Union Budget 2019, he said, “This budget has kind of articulated the vision for the next 5 years. We already had a budget before the government came into power and then this was more of a follow-through effect of what they have talked about. In fact, they repeated a lot of things that they talked about in the manifesto. I was pretty happy with the outcome of the budget."

Sector-specific, he said, “The road sector has got a 12.5 percent increase in allocation this year. The road sector companies are going to see better order books. Last year was a little tepid year for the road sector but the government’s move to 27-30 kilometers of execution per year is going to go up and we have the Bharat Mala program and we also have the government’s target, so I think the road sector is one where I see a big impact.”

Speaking about the pharmaceutical sector, he said, “Contract, research and manufacturing segment (CRAMS) is one segment which has been growing over the years and there does not seem to be any slowdown in that segment like we have seen in the generic side of the business."

 

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