Bernstein bullish on private banks, gold lenders after RBI’s surprise easing
Pranav Gundlapalle, Senior Analyst for India Financials at Bernstein, prefers large private sector banks such as HDFC Bank, Axis Bank, and IndusInd Bank.
These banks had seen slower growth amid tight liquidity, but improving conditions could support a rebound in performance and open up room for stock re-rating.
While non-banking financial companies (NBFCs) might benefit operationally, the larger private banks appear more attractive when valuations are considered.
Gundlapalle believes the Reserve Bank of India’s policy changes on June 6—a repo rate cut of 50 basis points and a CRR (cash reserve ratio) cut of 100 basis points—will be positive for gold loan companies like Muthoot Finance.
He said, “We are positive on the gold lenders. We do like Muthoot Finance. I think they’ have just come back to where they were prior to all the regulatory noise. In terms of valuation, it still has some legs to run.”
Muthoot Finance’s shares are currently trading at ₹2,506 as of 10:05 am on the NSE.
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Gundlapalle noted that while the rate cut was expected, the size of it was surprising. He explained that the RBI seems to have fast-tracked what would have been a gradual easing over three months. The CRR cut, which few had expected, is also a major positive.
He believes the RBI used the current favorable environment—such as manageable inflation and currency stability—to frontload its easing efforts. This should support overall economic growth and benefit both banks and NBFCs.
He said the CRR cut would directly help banks, and the overall improvement in liquidity should reduce borrowing costs across sectors. However, he does not expect any further rate cuts or easing measures in the next three to six months.
The RBI is likely to wait and observe the effects of the current steps, as its policy actions generally take time to show results.
Also Read | RBI’s rate cut a big boost for homebuyers and real estate, say industry leaders
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