2 themes Amnish Aggarwal is betting on for next few years

“In the near term, all the banks are going to have a tough time in the treasury portfolio because the interest rates have been rising,” says Amnish Aggarwal, Head of Research, Prabhudas Lilladher.

Is there merit in buying PSU banks, at least the big PSU banks? SBI is a no brainer but what about a Canara Bank or BoB?
In the near term, all the banks are going to have a tough time in the treasury portfolio because the interest rates have been rising but if you look at the past history also, if the interest rates peak out, then the earnings will look good. I think it can provide a little bit of upside here or there because some of these they have not been structural plays in the past.

One can play for trading for a trend structurally, some has to kick in for an investor to start looking at them favourably. Yes, some of these have changed, the mergers have happened, they have improved their systems, processes etc, but the growth rates of many of these PSU banks relative to the frontline private banks remain anaemic. At best, they will remain more like trading bets for 10-15% returnsand not like structural bets.


Also Read: Monsoon is good but just playing the rural theme is not enough

What is the outlook within the entire real estate basket? Are you seeing some potential there?
We have been quite positive on the entire capital goods theme and real estate for quite some time because of the way the Indian corporates have deleveraged in the past few years and the rise of some of the themes like PLIs and also their exports are rising. An all round increase in capex is happening across corporates and new segments are emerging.

For the eight to 10 years after the 2008-09 Lehman crisis, the capital goods or engineering stocks were down in the dumps but they have now started emerging out of the gloom and when any sector wakes up after so long being in slumber, it is more likely to be a 3-5-year run up. It has started maybe a year back but in some cases, the PE multiples might look fancy but has a long road ahead in the coming few years, in terms of growth and in terms of market returns also.

Real estate like capital goods was down in the dumps but the sector has started doing well. Real estate players are more into selling apartments or houses in the bigger cities or top 15-20 cities of India. The sales momentum is strong. The inflation does not have any impact on that as of now and I believe that like capital goods, real estate is also a theme which will play out over the next few years although unlike capital goods, here the cash flows are not that strong as of now. One should look at both the themes for the next few years.