More comfort needed in NPA front from private banks: Dipen Shah

In a chat with ET Now, Dipen Shah, Senior VP & Head, PCG Research, Kotak Securities, shares his views on the forthcoming Axis Bank results

ET Now: Axis numbers come out today, You mentioned that you like ICICI, Axis and HDFC in particular and private banks in general. What would you expect Axis to do and what do Axis and ICICI have to do to turn the sentiment in their favour in terms of results?

Dipen Shah: In terms of the results, most of the banks will have to give some more comfort on the NPA front, especially the private sector banks where concerns have been raised about NPAs. Public sector banks already have significant amount of NPAs. So we have to watch out for private sector banks which will have to give more comfort on the NPAs. Axis Bank has had a negative surprise vis-a-vis NPAs.

As for ICICI Bank, concerns have been raised because of its exposure to some of the large business houses but we believe that these are mostly built into the price. Markets have kind of built up the expectation that these are the stressed assets which will be coming out of Axis and ICICI. At the cost of repetition, I would say these banks have large exposure to retail assets and that is where we would build our comfort. That is the reason why we would be positive on private sector banks as compared to the public sector banks.