Why Vetri Subramaniam remains positive on BFSI amid tightening regulations

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Vetri Subramaniam, Chief Investment Officer at UTI AMC, maintains a positive outlook on the banking and financial services sector, despite the Reserve Bank of India’s tighter regulations casting a shadow over the industry’s sentiment.

“My larger call on banks and the financial sector would remain that these are some of the best balance sheets that we have seen in the banking sector in many years (pretty much 20 years),” he said.

While there can be stock-specific setbacks, but those can be handled with diversification, he said. “I would still be quite positive about the banking sector in terms of potential – not just outperformance but absolute returns over a two-year perspective.”

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Discussing about his expectations on corporate earnings, Subramaniam said the focus for the current financial year (FY25) will be on volume growth. FY24 earnings were more margin led and the best of the margin is now behind us.

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The global picture, he says, could be more tricky as there has been a very big shift in the kind of expectations for interest rate policy by the US Federal Reserve.

“At the start of the year, people were thinking about 5-6 rate cuts by the US Fed and now people are talking about the possibility that the next move by the Fed might be up rather than down,” he said.

According to Subramaniam, Indian IT companies are some of the most globally competitive companies.

The kind of capex that has been seen in the US tech signals better times ahead for the Indian IT sector.

“Into any kind of weakness or bad news – that is when you get valuations which are more attractive, I would be pretty happy to look at the IT sector,” he added.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow