PSU Banks may outperform Pvt peers in next one year

We have Eicher in the portfolio but I do not think the Eicher story is over simply because last month numbers have been slightly below expectation at around 17% growth vis-a-vis 25% growth. These were plant issues because chromium plating capacity was exhausted in one of their plants. They had to limit the production and once the chromium plating capacity comes up, January onwards you should be seeing better numbers.

Two-wheelers and four-wheelers are two different stories. One of every two cars being sold is by Maruti, but and that is not the case in the case of two-wheelers. There are far too many players and too many product launches and the capacities are varying across segment and so really not comparable. But again, four-wheelers have seen 6% to 7% volume growth all this month. So, we have to look at the numbers as we go ahead into January, February,March and so on.

The NBFCs will continue to grow at 15-18%. There is no doubt about that but it is just that the valuation is not in favour of the private sector banks and NBFCs. In the next one year, it is all going to be about valuations and growth and because the returns and the growth has been more than fully factored in for the next one year in the case of private sector banks and NBFCs. That is why PSU banks may be outperforming the private sector banks in the next one year.

Life insurance is a case of under penetration of the category and the mix in the last five years has shifted away from the ULIPs to pure protection. This is a far more profitable business for life insurance companies and this is how the traditional insurance businesses have flourished. The big picture about life insurance is that the size of the opportunity set is quite huge. This is a tough entry barrier business because it takes a minimum of 10 years to break even.