This India bull says banking & IT greatest bets for subsequent 10 years

NEW DELHI: Worth migration from the general public to non-public sector banks and expertise migration from Boston to Bangalore are among the many two largest themes to play within the Indian inventory market over the following 10 years, says Dalal Avenue veteran Raamdeo Agrawal.

In his e book Worth Migration, Adrian Slywotzky had outlined the time period as a movement of financial and shareholder worth away from out of date enterprise fashions to new, simpler designs which can be higher capable of fulfill prospects’ most essential priorities.

Motilal Oswal Monetary Providers, the place Agrawal is the present chairman, itself had revealed a paper on worth migration in 2017, after the passage of the GST Modification Invoice and demonetisation of excessive worth forex notes, which the brokerage mentioned marked the start of the following section of India’s evolution.

Agrawal says worth migration in banking has been occurring for a very long time. “In over 25 years of privatisation of Indian banking, it has taken about 30% of the market share of the rising financial system. The subsequent 30% worth migration will occur within the subsequent 10 years,” he mentioned.

Worth migration in banking is occurring in credit score disbursal and that’s going to present an enormous edge to the lenders that do effectively, he mentioned.

“Financial growth occurs on the again of credit score depth. Credit score depth of an financial system attempting to double from close to $3 trillion to $5 trillion by FY25 will probably be far increased. There are solely 5, six banks which might underwrite. Even the federal government desires to fold up all of the PSU banks into 4 or 5 SBI-type massive banks,” he mentioned.

So 5 PSU banks and 5 personal sector banks — all in all 10 banks will underwrite possibly one other Rs 110 lakh crore value of credit score and that could be a big alternative, says Agrawal. “So worth migration from public to non-public sector for credit score disbursal is already occurring and that’s going to present an enormous edge to the lenders which might do effectively,” he mentioned.

Giant banks will achieve massive market shares and develop on the charge of 20-25%, whereas the small and mid-sized gamers can develop at 25-30% for a few years to come back. That’s the reason Financial institution Nifty has performed considerably higher within the final 10-15-20 years in contrast with Nifty, says the MOFSL chairman.

Know-how is King
The migration of Indian techies from Boston to Bengaluru is the most important ever factor that has occurred within the final 20 years. The subsequent 10 years would be the most attention-grabbing interval.

“Within the subsequent 10 years, we are going to go from $150 billion exports to $300- 500 billion exports. We’re a powerhouse, however we are going to turn out to be a super-powerhouse due to the digitisation of the worldwide financial system. We’re the enablers of this digitisation,” Agrawal mentioned.

The position of companies sector firms will probably be additional elevated as soon as they’re transferred to cloud, as a result of then the administration management will probably be far lesser. “My sense is, there’s a golden period unfolding for Indian IT. The world has turn out to be flat as a result of work from wherever has turn out to be a actuality because of Covid, ” Agarwal mentioned.

“Why ought to you’ve got a 10X differential within the remuneration for a similar work? Because the world opens up, all clever work will come to clever Indians, and therefore, we may have extraordinary time within the subsequent 5 years. My sense is, the Indian tech and Indian companies firms may even provide superb alternatives,” he says.