It's not just HDFC that is looking good.
Deposit growth seems to have come back.
We increased the position when the stock came off through January–February and are obviously delighted to see that deposit growth number.
We believe they can sustain stronger deposit growth as most of the banks in our country.
Overall, the lending sector looks in good shape, asset quality is under control.
BFSI seems poised to be the story of this quarter. It's not just HDFC that is looking good. Deposit growth seems to have come back. Saurabh, what's your take here? Which are the categories of companies really poised for an upmove?
Saurabh Mukherjea: Look at HDFC Bank. We are large shareholders and have been for a long time.
We increased the position when the stock came off through January–February and are obviously delighted to see that deposit growth number. We believe they can sustain stronger deposit growth as most of the banks in our country.
Given the strength of the liability franchise, given the aggressive branch rollout, they are now rolling out 1,300–1,400 branches a year, which in the context of Indian banking is an astonishing figure. So hopefully the combination of the strong deposit franchise and their legendary underwriting skills will give us the returns that we aspire to see in HDFC Bank.
The stock obviously had a tough time over the last three years. But given the growth of the business, we remain optimistic that they will do well over the next two to three years.
But beyond that, as you mentioned, generally the banking sector is looking in good shape. Overall, the lending sector looks in good shape, asset quality is under control. If the lenders, banks and non-banks can combine strong asset quality with financing the private sector capex piece and I think the next 12 months potentially will be the best 12 months for the banking sector this cycle.
Remember, so far the main lending engine has been retail. The corporate lending engine hasn't yet fired into high gear. That will only happen when the capex cycles for the private sector begin and as signs of that emerge, I think we will be looking to stay heavily invested in banks and NBFCs in Marcellus’s portfolios.
But beyond that, I think the other sector we are very optimistic on is IT. If you see, Naukri.com numbers, IT recruitment is picking up and that's typically a lead indicator that the IT companies are getting greater visibility on execution. IT companies are pretty smart. They build the order book, but until they see that the client has signed on the dotted line saying “execute karo”, they don't go and hire staff.
So the fact that Naukri.com’s data suggests that IT recruitment has picked up, I think is indicative of the fact that the IT companies are seeing a degree of better visibility on project execution on their client side.
That again makes sense. If you look at the scorching pace of American economic growth, it does make sense that the big American corporates are telling the companies whose names you are flashing on the screen. The big American companies are telling the Indian IT services providers, boys and girls, begin the execution.
So we are optimistic there. We have got a large position for a long time in TCS and then in engineering R&D. We have been invested in Tata Elxsi and LTTS for a while.
