BNP Paribas sees opportunities in this sector hiding in plain sight
Summary
Santanu Chakrabarti, India Analyst – BFSI at BNP Paribas believes the net interest margins (NIMs) of the banking sector for April to March 2024-25 will look better if the rate cut comes in October instead of August.
According to Santanu Chakrabarti, India Analyst, BFSI, BNP Paribas, the appetite and interest in public sector undertaking (PSU) names is good. He believes there are opportunities hiding in plain sight in the banking, financial services and insurance (BFSI) sector.
In the non-banking finance (NBFCs) space, Bajaj Finance is his top pick.
He believes the net interest margins (NIMs) of the banking sector for April to March 2024-25 will look better if the rate cut comes in October instead of August.
NIMs typically bottom out a quarter after the rate cuts because now so much of the lending is repo rate-linked, he noted.
He expects a small disappointment in Axis Bank’s numbers, which are scheduled for release on April 24.
“Mainly because the market is probably building in a slightly higher NIMs than what we expect. Having said that, Axis Bank is my third preferred pick within Indian banking,” he said.
Sharing his view on the fraud at Mahindra and Mahindra Financial Services , due to which the company deferred the release of its quarterly results, Chakrabarti said, “Any event that comes out in a financial services business which raises question marks about processes etc., will be generally taken fairly seriously by the market. And the burden of proof generally lies with the company.”
On April 22, Mahindra Financial notified the exchanges about a fraud totalling ₹150 crore, which took place at one of its branches in the North East region. This fraud involves forgery of Know Your Customer (KYC) documents, leading to the embezzlement of company frauds.
Also Read | Indian banks may report smaller margins and fewer bad loans
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