With or without merger, Bharat Financial is a strong player: Digant Haria, Antique Stock Broking

In a chat with ET Now, Digant Haria, AVP Research, Antique Stock Broking, says it is a franchise which anyone would want and the two new private sector banks which have the stated ambition to grow at 25-30% will definitely love to have such a franchise.

Edited excerpts:

Do you think a merger is coming for Bharat Finance?

It is very difficult to guess that but it definitely looks like there is something on the table.. With or without merger, Bharat Financial has been the strongest player and probably it is a little bit visible in their performance. If it happens, it is good for everyone. If it does not happen, it takes a little more time for the company to go back to its earlier days when it reported 4-5% ROAs and 20% ROEs.

But from a valuation standpoint, the stock has come off from teasing 1000 at one point in time. Do you think it will become even more compelling at Rs 600-650 for a bank to take over Bharat Financial?

For a bank, it is definitely a delight. If you are asking me from that standpoint, any bank would love to have a franchise which is present in two lakh villages with close to 1300 branches, 20,000 streets on the fleet employees and close to 60 lakh customers. It is definitely a franchise which anyone would want and the two new private sector banks which have the stated ambition to grow at 25-30% will definitely love to have such a franchise. I am sure they would not mind paying more for such a franchise. Demonetisation could be an opportunity where the strong guys could decide to accept proposals from these large banks. I am sure a lot of these companies have been receiving proposals for the last 9-12 months. Demonetisation has accelerated the entire trend.

It is more for these individual companies to decide whether or not it is the right time to merge with a bigger player or just to continue and grow at the fast pace which they can do without the regulations of being a bank.

What is the stock looking like at the current price?

If somebody is willing to wait out for another three to six months when the data really starts improving, with or without the deal, the current price is quite good for investors.

Obviously, the investors cannot look at June 17 or September 2017 for the stock. If investors are willing to wait out till something like March 18 or maybe September 2108, that is one and a half years from now, it is a fantastic buy at the current price.

It is the strongest player and we expect that it will come out very strong from this entire demonetisation related stress and the shakeout in the sector.