SBI | SBI share price: Largecap banks to outperform smaller ones in the next two years: Sandip Sabharwal

“I hope markets are able to give positive returns over the next one year. I do not like euphoria and I hope there is no euphoria and specific companies continue to do well,” says Sandip Sabharwal, asksandipsabharwal.com

Given that the year gone by belonged to M&M and that was the star performer within autos, would you want to change the dynamics if you have any auto exposure?
My preference continues to be for M&M and

because I think they are set to grow rapidly in terms of earnings and their valuations are also not so high for the next two years. In the case of two-wheelers, commentary this time has been positive after a long time and to that extent it should be taken well overall because they are the more realistic management unlike some of the other managements of other two-wheeler companies who always talk bullish.

If Bajaj Auto is relatively bullish on demand, that augurs well for the overall two-wheeler space and Bajaj Auto is not very expensive but the export headwinds remain real even though the company has said things could improve. So, that could be a bit of a dampener.

The last Samvat has not been all that great. Do you think the year ahead is going to be better?
Yes, actually it has been good for people who held the right kind of stocks. I think it depends on what you are holding and I do not think it has been bad. I think it has been a good year. I like these kinds of years where the markets do not fall so much where everything falls irrespective of fundamentals and they are not in euphoria where everything rises irrespective of fundamentals.

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These kinds of markets are good and I would hope that like the rupee-dollar story, we have to make the comparison where we are flat but the world is down 30%. So are we effectively up or what? I think that is where the markets are. I hope markets are able to give positive returns over the next one year. I do not like euphoria and I hope there is no euphoria and specific companies continue to do well.

Nobody is bothered about SBI’s size, reach, balance sheet size. Everyone suddenly is excited about how they have managed to list their subsidiaries. They have become number one in mutual funds, insurance and credit cards. People are now ignoring and praising ?
I think that is the nature of the markets which salutes the rising sun. The market gets focused on whatever company starts to outperform and start pushing that stock and I think that is what is happening.

SBI was always cheap and the key was the core holdings valuation and like you said, they have gained market share across the board and most of their subsidiaries and that continues to add value. The core banking operations are still not so expensive for SBI, given their CASA strength.

In my view, in the next two years, the larger banks will do better than the smaller ones because of the low-cost deposits they have in a rising interest rate scenario and to that extent, SBI is very well placed. In the near term, because it has done so well and most retail investors and everyone else loaded up on it, we have to see how it performs but longer term directionally, it is well placed.

What is your take on ? That too has outperformed this year and eked out gains of almost 50% this year. Do you see it continuing the up move?
Sorry. I do not track that stock. There are too many stocks to track, I cannot track all of them.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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