Well, a slew of Q4 updates have come in from the banking and the NBFC sector. Let us begin with HDFC Bank itself. Really, the pace of growth continuing at a very strong momentum for HDFC Bank. Your take?
For HDFC Bank, the numbers were pretty strong on a higher base. Both YoY and quarter on quarter we have seen a good strong growth which is quite interesting. Also, coupled with that, when we look at the names like Mahindra Financials, Poonawalla Fincorp, Federal Bank in the banks, these are the names where the overall business update is extremely strong. So, we think that now we are entering into earnings season with this business update and particularly the banking sector should do well, both PSU and private banks.
But since we are talking about earnings season, it does not look like it is going to be a pretty one for the IT sector as a whole. A lot of expectations suggest it is going to be muted when it comes to top line and all eyes will be on the commentary and the guidance for FY24. Ahead of that, how should one position themselves when it comes to the IT sector? Should they wait for the weakness to be out or is it a good buying opportunity after the correction?
Overall, we think that IT sector also should do relatively better compared to Nifty, primarily because we have seen some stabilisation in the financial vertical which is very high for many of the corporates and that should give some stability. Also, the entire sector underperformed big time last year, so the valuation comfort is pretty much visible and we think that the largecap companies, maybe Infosys, TCS, HCL Tech that is where we do not expect any negative surprises.
So, both valuation comfort is there, the numbers should be by and large okay. Yes, because of the consolidation globally, let us say between Credit Suisse and UBS, there might be company specific issues here and there, but by and large we do not see any major challenge for the IT needs.
Wanted your take regarding Bajaj Finance and HDFC as well in terms of the growth that we have seen, it continues to be strong, but valuation-wise do you see comfort on these names?
So, for Bajaj Finance, the numbers were pretty much okay but the larger concern over there is that versus the valuation, how the numbers are stacking up and there is some degree of gap there. So we are not very positive on Bajaj Finance per se.
HDFC, because of the way the interest rates have moved up on the housing finance part, we have to really wait and see the impact on the actual disbursement, but overall because now that it is a merged entity and HDFC Bank is doing well, maybe it may not have any major negative repercussions.
So, overall, we think that we have to take a stock specific approach when it comes to NBFC because the interest rates are high and that will have some bearing on the NIMs for some of the companies.
And what about consumption as a space because we have only got numbers from Marico at the moment and it does not look very strong because it is only a single-digit growth that they are talking about in the top line and the commentary on inflation is positive but does not look like we are out of the woods.
Yes, so we have to wait for the updates, more importantly the quarterly earnings and the outlook that the managements are giving out because there has been a concern on the overall growth when it comes to rural side, but now that we are into earnings season, we will have slightly more clarity.
The sector looks a little high in terms of valuations, but if the growth is in line with expectations, we really would want to look at it.
So, from that perspective we should have a positive bias on names like Godrej Consumer, HUL, Dabur, but we would wait for the actual commentary.