“Real estate as a pack has got substantial room for growth given the fact that the affluence in the system is increasing at a very rapid rate. There is a need for nuclear family housing and we are going to see the smaller towns, tier II and tier III, grow much faster than the cosmopolitan cities,” says Vinit Bolinjkar, Ventura Securities. Edited excerpts:
ET Now: The deposit growth what we have seen for private banks has been strong. In fact, the advances growth for PSU banks has also been in a very comfortable range. Now, should we expect stellar numbers from banks and finance also? What are you making out of it?
Vinit Bolinjkar: I expect very strong banking numbers to come in, especially from the PSU banks. Secondly, we might see some kind of NIM contraction, but that will be more than made up by the high street growth that we are witnessing amongst all the banks. And, the other factor would be with the economy kicking off, NPS could also be at suppressed level. So, the profitability would also improve. So, we are looking at slight NIM compression, high volume growth and NIM staying in control leading to stupendous numbers. The top picks among the PSU banks are SBI, Canara Bank and Bank of Maharashtra. And among the others, we like IDFC Bank and Axis Bank as dark horses.
ET Now: We have seen manufacturing sectors growing across various industries. The data that we have picked in from China's PMI number, in fact, the GDP number from other economies, base metal prices or LME, the kind of move we have seen, how should one approach these stocks considering that quite a move has already kicked in?
Vinit Bolinjkar: So, we need to take two things into consideration. One is the speedy reshoring that is happening not only in the United States but across Europe. In fact, Europe is spending about 400 billion while the US is on a 2 trillion kind of a build out. So, with all this along with India as well as China being the major markets which are all spending on infrastructure, you are going to see a rapid boom in the demand for metals. And what has been happening is that the investment in metals has not kept pace with the implied demand and typically for any mining capacity to come onstream it takes 10 to 15 years. So, what we are going to see is a very long kind of commodity rally with commodities moving far higher and to contribute to this is going to be the dollar debacle which we are going to witness over this decade leading to substantial movement of investments from financial products to hard metals. So, metals are very strong investments. We like Hindalco, Vedanta is one of our top picks, Hindustan Zinc and also Lloyds Metals which has got a very strong capacity build-out that is coming.
ET Now: Let us talk about a sector, the second biggest gainer of the week and that is real estate. Now we have been seeing some continuous rally coming in when it comes to this entire real estate space. So, I have two questions for you when it comes to this sector. The first one, is it too late for an investor to start investing in this sector. Has it seen enough of a run-up or are there more legs to this rally? And the second question is if you were to play this real estate space right now what would your strategy be here because we have seen stellar quarter four numbers coming in from all across the board when it comes to the real estate space. Would you prefer larger developers like DLF, Prestige, they have been doing very well or do you think now is the time for the smaller names like Kolte-Patil and Signature Global, Century Textiles all of these to shine because their quarter four numbers have also been stellar. So, how do you play this pack if at all now is a good time to enter?
Vinit Bolinjkar: So, real estate as a pack I think has got substantial room for growth still remaining given the fact that the affluence in the system is increasing at a very rapid rate. There is a need for nuclear family housing and we are going to see the smaller towns, tier II and tier III grow much faster than the cosmopolitan cities. So, given that kind of scenario, we prefer the Kolte-Patils of the world which will do very well, the second rung of stock that should do very well. And, among the largecaps I think one stock which has just finished some of its corporate tie-ups in place is going to be the stock of Indiabulls Real Estate. So, if you want to play the cosmopolitan real estate story, I think Indiabulls Real Estate is a very cheap stock with a large land bank owned almost 15 years ago, so they are sitting on virtually extremely low cost land bank and they would be definitely getting very large margins on projects that they roll out in the cosmopolitan areas.
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