Large-cap banking stocks look set to rally: Deven R Choksey

Many banks have previously expanded their loan books, and that's because they have more on the retail side of lending, says Deven R Choksey, MD, KR Choksey Investment Managers.

Have you discussed adding midcap, large-cap in your portfolios or even to your key clients' portfolio?
Yes, I would particularly like to see how the infrastructure space does in the coming six months. Banks would be the prime candidate as far as the outlook is concerned on the growth side. Many corporate, private sector banks have expanded the loan books in the previous quarters. They are ready to expand these loan books because they have more on the retail side of lending. On the corporate side - HDFC, Axis could probably get into that list. Going forward, some large-cap companies, including those in the banking space, look set to rally.


The Vodafone Idea stock has come back to 52-week highs. The management commentary also hasn't ruled out fund infusion. That goes well for Pilani Investments, the holding company. What are your thoughts?
Pilani Investment is a company set up for investing in Birla Group, and many of the companies invested through the step-down subsidiaries. In Vodafone's case, it would be Grasim.

There is a possibility that when market capitalisation rises, the value should get accumulated into the books of the holding company. It should get reflected in the market price as well. On the other side, because of the open structure and investment by the step-down subsidiary, the direct benefit is not coming into the holding company in this case.

The investment largely remains an investment vehicle arm for the Birla Group of companies. The investment remains largely a passive approach and not a dynamic approach. As a result, it quotes at a steep discount comparatively. At the same time, the source of revenue comes from either the dividend or, in the case of Pilani Investment, they have also expanded the loan book to carry out the NBFC activity.

So in the form of interest, some part of the income would come into their books. This is the confusion the investor would continue to have - no clarity on how the holding company would monetise the investment portfolio. As a result, the discount remains on the higher side. No more justifications can be attributed except that the structure remains opaque. An investor would opt for ETF kind of products when they want to structure a specific portfolio.