Rakesh Jhunjhunwala bets big on bank shares, even ‘inefficient’ lenders; ‘bull run to last for decades’

The massive bull reiterated his views on what he expects to be a bull run lasting a long time, saying that Indian inventory markets have the potential to assist traders pocket large returns over the approaching years.
(Picture: REUTERS)

Ace investor Rakesh Jhunjhunwala expects the demand for cash to extend within the coming years as India’s economic system picks up steam, making him extraordinarily bullish on the banking sector, together with the “so-called inefficient banks”. “I’m extraordinarily bullish on banks and intensely bullish on the so-called inefficient banks,” Rakesh Jhunjhunwala mentioned in an interview with CNBC TV18. The massive bull reiterated his views on what he expects to be a bull run lasting a long time, saying that Indian inventory markets have the potential to assist traders pocket large returns over the approaching years. 

Banks in for upside?

“The inefficient banks, have very excessive cost-income ratios, these will come down dramatically,” Rakesh Jhunjhunwala mentioned. He added that he expects India to develop at 14-15% nominal GDP this yr and 10-12% nominal GDP over the approaching years. This, in line with the large bull, will lead to a rising demand for cash. “When there’s demand for cash, banks will get bargaining energy after which lenders that may garner deposits will get that energy so I’m bullish on the banking sector as a complete and particularly on the outdated public sector banks as a result of they’ve the most cost effective valuations and are going to see the most important upside in earnings,” the ace investor added.

PSU shares favoured, commodity super-cycle forward

The massive bull once more refused to go sector-specific however mentioned that the bull run will final for many years. He, nevertheless, voiced his views on the general public sector listed firms as bullish. “If the federal government will get its act proper, PSU shares can provide you super returns. I’ve put my cash into PSU banks however I feel your complete sector can go properly,” he mentioned.

Diving additional, Rakesh Jhunjhunwala mentioned that the commodity supercycle is simply beginning with one other 5-7 years left within the run. He added that valuations for metals, regardless of their sharp up-move, is a joke. “In the event you base your self on final quarter costs, at the moment’s costs are 20-25% increased than the typical realisation of the earlier quarter. Firms may see earnings of Rs 200-300 per share. Cement shares are valued at 30-40 instances earnings, metal shares are valued at 5-7 instances earnings and persons are doubting it,” Rakesh Jhunjhunwala added. 

Massive bull sees structural modifications

Rakesh Jhunjhunwala mentioned that his bullish views on India are primarily based on structural modifications which have taken place over the previous couple of years within the nation. “I feel the economic system is in take-off stage, covid or no covid,” he mentioned. “We went via the NPA cycle, noticed a whole lot of change in Jan Dhan, IBC, RERA, now reforms are occurring in labour legal guidelines, farms legal guidelines. I feel India is on the edge of lengthy financial development,” the billionaire investor mentioned. He lauded the digitisation of India which has facilitated the working of many from properties through the pandemic. 

 A part of the structural modifications, Rakesh Jhunjhunwala mentioned that India has seen its company sector enhance. He added that with debt ranges on company stability sheets very low, India may see the very best capital expenditure cycle the nation has ever seen. He expects company income to GDP to enhance to 5-6% this yr. 

No third wave

Though covid has taken its toll on the economic system and markets, Rakesh Jhunjhunwala sees no third wave coming that will impression markets. “Wave or no wave Indian economic system is a lot better ready to face this sort of disaster. I, for positive, can guess my cash there shall be no third wave,” he added. The massive bull advises traders to keep up warning however mentioned that even when there’s a third wave markets are already discounting it.