Rajeev Thakkar of PPFAS Mutual Fund bullish on private lenders for 2025

Rajeev Thakkar, Chief Investment Officer at PPFAS Mutual Fund, believes that despite the market’s volatility since October, compelling investment opportunities continue to emerge. Speaking at Moneycontrol’s Global Wealth Summit, Thakkar expressed strong confidence in private sector lenders for 2025, citing favorable valuations and resilient asset quality.

“If you look at the 1-year and 10-year yields, they seem likely to remain flat. Banks today are raising 1-year funds at 7.5 percent, leaving almost no room for profitable spreads on home loans or high-quality lending. Short-term rates remain elevated, putting pressure on CASA deposits as more investors shift to fixed deposits, hunting for better returns. At the same time, the RBI is actively injecting liquidity into the system, which should eventually bring short-term rates down. Given this backdrop, bank valuations look attractive, and asset quality remains strong, making private sector lenders a compelling bet,” Thakkar explained.

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Reflecting on past market cycles, Thakkar highlighted how excessive liquidity led to irrational exuberance and hyper-competition across sectors.

“Look at quick commerce—everyone jumped into the race to deliver groceries in 10 minutes. Dark stores popped up everywhere, and firms aggressively subsidised deliveries to capture market share. We saw the same frenzy in e-commerce and big-box retail. Investors were convinced that India’s growth story justified FMCG stocks trading at 80-90 times earnings, and D2C companies were embraced without question. But at some point, reality catches up. Asset allocation discipline and a laser focus on profitability have to take center stage,” he noted.

Beyond banking, Thakkar pointed out that the current market offers a stark contrast—some sectors present lucrative opportunities, while others appear dangerously overinflated.

“The key is selectivity. There are pockets of deep value and pockets of froth. The challenge for investors is to separate the two,” he added.

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