Ace investor Rakesh Jhunjhunwala expects the demand for revenue to improve in the coming years as India’s economy picks up steam, generating him particularly bullish on the banking sector, like the “so-called inefficient banks”. “I’m extremely bullish on banks and extremely bullish on the so-called inefficient banks,” Rakesh Jhunjhunwala stated in an interview with CNBC TV18. The major bull reiterated his views on what he expects to be a bull run lasting decades, saying that Indian stock markets have the prospective to assistance investors pocket enormous returns more than the coming years.
Banks in for upside?
“The inefficient banks, have very high cost-income ratios, these will come down dramatically,” Rakesh Jhunjhunwala stated. He added that he expects India to develop at 14-15% nominal GDP this year and 10-12% nominal GDP more than the coming years. This, according to the major bull, will outcome in a increasing demand for revenue. “When there is demand for money, banks will get bargaining power and then lenders that can garner deposits will get that power so I’m bullish on the banking sector as a whole and especially on the old public sector banks because they have the cheapest valuations and are going to see the biggest upside in earnings,” the ace investor added.
PSU stocks favoured, commodity super-cycle ahead
The major bull once again refused to go sector-distinct but stated that the bull run will last for decades. He, nonetheless, voiced his views on the public sector listed corporations as bullish. “If the government gets its act right, PSU stocks can give you tremendous returns. I have put my money into PSU banks but I think the entire sector can go well,” he stated.
Diving additional, Rakesh Jhunjhunwala stated that the commodity supercycle is just beginning with a further 5-7 years left in the run. He added that valuations for metals, in spite of their sharp up-move, is a joke. “If you base yourself on last quarter prices, today’s prices are 20-25% higher than the average realisation of the previous quarter. Companies could see earnings of Rs 200-300 per share. Cement stocks are valued at 30-40 times earnings, steel stocks are valued at 5-7 times earnings and people are doubting it,” Rakesh Jhunjhunwala added.
Big bull sees structural adjustments
Rakesh Jhunjhunwala stated that his bullish views on India are based on structural adjustments that have taken spot more than the last handful of years in the nation. “I think the economy is in take-off stage, covid or no covid,” he stated. “We went through the NPA cycle, saw a lot of change in Jan Dhan, IBC, RERA, now reforms are happening in labour laws, farms laws. I think India is on the threshold of long economic growth,” the billionaire investor stated. He lauded the digitisation of India which has facilitated the working of quite a few from residences throughout the pandemic.
Part of the structural adjustments, Rakesh Jhunjhunwala stated that India has seen its corporate sector increase. He added that with debt levels on corporate balance sheets pretty low, India could see the highest capital expenditure cycle the nation has ever seen. He expects corporate income to GDP to increase to 5-6% this year.
No third wave
Although covid has taken its toll on the economy and markets, Rakesh Jhunjhunwala sees no third wave coming that may perhaps influence markets. “Wave or no wave Indian economy is much better prepared to face this kind of crisis. I, for sure, can bet my money there will be no third wave,” he added. The major bull advises investors to sustain caution but stated that even if there is a third wave markets are currently discounting it.