Anshul Saigal analyzes the potential returns of PSBs compared to private banks, discusses VIP and Safari s competition, and highlights the impact of US FDA regulations on Indian pharma companies, emphasizing improving business models. On Piramal Pharma and Wockhardt, he points out their business models are improving without recommending a buy.
Anshul Saigal, Founder of Saigal Capital, discusses the trade of the century in the PSU banking space. PSU banks have similar ROEs and earnings growth as private sector banks, but with lower price to book multiples. I do not see that there cannot be upside in these banks from here as well. However, there are certain pockets where upsides are more or less captured, at least in the short term.
Anshul Saigal says some people are holding cash but I would say the majority are not holding cash. What that means is that the majority are not expecting a meaningful correction while some are expecting a meaningful correction. An investor who is looking for defensives should go for FMCGs. An investor who is looking for long-term wealth creation should look at QSRs. And there are now multiple opportunities in that space to make money over the next few years.
“2023 was one such year where earnings understripped markets, so markets say for the small and midcap names, markets were up somewhere in the region of 35% to 40%. I do not think earnings grew by that much. Earnings would have grown in the range of say 20 odd percent. Now what that means is that markets have outstripped earnings for that one year.”
“We believe the capex cycle in the Indian economy is just starting and over the next one to two years we may see much more of this play out, earnings surprising on the upside in many pockets of the market and that will give tailwinds to the markets and individual opportunities in times to come.”