Will buy into banking stocks that command cheap valuations: IV Subramaniam

In a chat with ET Now, IV Subramaniam, Director, Quantum Asset Management Company Private Limited, shares his views on the banking space. Excerpts:

ET Now: What is your take on PSU banks, Is this a right time to put money into PSU banks?

IV Subramaniam: Yes, if you look at the month of August when most of these banks declined very sharply that was a good time to buy PSU bank stocks.

Some of them have run up quite sharply in the last month. It does look like the market is factoring in the worst. We do expect some issues on their portfolio, particularly on their asset quality, and especially those banks which have lent to the infrastructure space.

But I do think that there is some value in many of these banks and we own couple of them in our portfolio.

ET Now: Why are you bullish on banks?

IV Subramaniam: The 5% ecocomic growth is not going to be a permanent number. We are bullish on the Indian economy over the longer term, near term numbers could look muted at 5% but on long term basis, India can clearly grow at around 6.5% on a sustainable level.

So you do need credit growth, different kind of businesses growing at a good pace and banks definitely would meet lot of those kind of requirement.

Specific banks will have some asset quality issues. We would like to avoid those banks. But a well managed bank with a decent credit growth and good asset quality, if the valuations look cheap we are quite happy buying into those kind of banks.