Could YES Bank Be An Outperformer In The Future?
YES Bank Could Be An Outperformer Over The Next Few Quarters
Could Yes Bank be an outperformer in the future? Yes, Bank of America could be an outperformer in the coming quarters after performing quite well. Are you being very selective within space now that we are seeing this come back in IT?
Indeed. Certain industries, like BFSI and retail, would be hit by IT spending cuts.
So focus on verticals with lower costs. I think the IT sector’s potential lies in vehicles, design-led firms, and technological stocks.
Companies with differentiated services may also be selected. So I’d choose midcap IT stocks. I think they can keep growing at a good rate because of their size and location, so Wall Street gives them higher PE multiples.
I think PE multiples are appropriate, and the next three to four years look promising for midcap IT companies. We prefer companies like KPIT and ambitious companies like the merged LTIM.
Once the global economy stabilizes, I think the IT industry will rebound, and midcap IT companies will be the growth drivers and leaders.
Two stocks underperformed. Even Yes Bank’s stock is around a 52-week high after its financing.
How come this fundraising news didn’t boost the stock?
This is a great example of how the RBI and the banking industry worked together to save a bank that would have caused depositors and shareholders to worry if it had gone bankrupt. Instead, a strategic investor
The RBI’s survival plan for Yes Bank has worked effectively, and this financing is the next stage in making sure the bank can develop on its own.
It’s a fantastic moment and example for the financial industry; therefore, I applaud it. Yes, the bank has gotten a lot of the quick benefits, but more money could be put in.
Read: Kay Jewelers Credit Card Reviews: Is It Any Good? Once they shift a lot of bad debts to the asset reconstruction company, I think their NPA ratios will look good and they’ll have growth capital.
Yes, Bank of America is well managed, has a robust technology platform and bank network, and its CASA ratios are good.
It could be an outperformer in the next quarters or years, and its inexpensive price is attractive to many traders. Yes, Bank of America is great.
Let’s watch Paytm’s quarterly figures. The repurchase was a bit of a damper, so let’s see how it goes.
Could this be 2023’s Yes Bank, given its turnaround and lending cycle?
When the IL&FS crisis broke out, many NBFCs had NPA-related concerns. Now, I think their supplies are complete. They’re well capitalized and ready for a growth phase.
The market and investors still have a perception issue with such banks and NBFCs, which is why they have low PE multiples.
Companies like If you give troubled companies three to four quarters of solid earnings, their price-to-book and price-to-earnings ratios will rise.
When the NPA cycle changes, I’m not sure how banks and NBFCs will perform. Even then, it must be examined if they’ve learned from the past NPA cycle and made risk management reforms.
PSU banks, Indiabulls Housing Finance, and other NBFCs are all trading bets at this moment, and you could invest money there, but for a three- to five-year perspective, go with large-cap private sector banks.
If that happens, it’s a goldmine; if it doesn’t, you’ll have a poor franchise.
I think IDBI Bank is in a really intriguing place at this level, and I’m sure it will have a strong response.
Once it’s privatized in a true sense, growth rates will be maintained or improved by new management.
It’s just too pricey compared to its peers, and the new ownership and management arrangements are unclear. At best, keep it on hold; if you’re involved, stay invested, but there are better, cheaper alternatives.
The other space in the news is capex, and the derivatives might be banks, railroads, defense, and many other sectors.
How would you invest in this topic?
Larsen & Toubro is a good choice. I think it’s on a strong footing and has fantastic earnings visibility because of its huge order book. The Middle East is another major area for them.
We can expect increased order flows there, which could diversify our order book and income. Subsidiaries are also valuable.
So that’s a portfolio must-have. Other capital expenditure businesses to think about are engineering and capital goods, where I think there could be specialized players.
This sector should do well, and after years of underperformance, we’re seeing a significant upswing in the capex play. Investors should bet on this theme.
Stock ideas for 2023 from you?
We’re positive on retail, especially clothes. Now we have niche retailers. I’ll name non-recommended companies like Lotsavar.
Active Campus Wear, Metro Brands, Ethos All of these companies are in a good growth zone, and their prospects should be analyzed. They’re all costly now, but they may be value producers like Avenue Supermarkets. So we’re optimistic about this category, which tops our list of targeted stocks.
