Private banks poised for strong rebound, says Parag Thakkar

A billion-dollar investment in Sammaan Capital has sparked fresh discussions about the outlook for non-banking finance companies (NBFCs) and private sector banks. Parag Thakkar, a market veteran, believes this signals a positive shift for India’s financial sector even if the immediate market reaction remains mixed.

“No, we do not have Sammaan Capital in our portfolio, but this is a very welcome investment,” he said in an interview to ET Now.

“This is a very large investment in NBFC which is trading at below book value. Of course, the price at which the investor is coming is below the current price. So, stock price reaction can be mixed. But I would say that it is a very positive development from India’s perspective.”

On the auto sector, Thakkar explained that his fund had already booked profits after a sharp rally triggered by the RBI’s 50 bps rate cut and the subsequent GST cut. “We had built up a huge position in auto… we booked profits in auto and we shifted to financials,” he said. Linking auto sales to banking gains, he added, “If suppose Maruti sells two lakh cars a month which they will definitely do in this month, then HDFC Bank will also benefit because they are the biggest lenders for the car industry.”

Turning to private banks, Thakkar argued that the recent underperformance relative to PSU banks could soon reverse. “HDFC Bank business update is in due any time, so market will see that and we will find a growth or margin number a little bit lower, but I would say that this is a bottom and this is where we would like to buy the stock,” he noted. He highlighted HDFC Bank, ICICI Bank, and City Union Bank as top buys, stressing that his team would add on dips.

Thakkar sees FY27 as a landmark year for the sector. “FY27 is going to be a best year for private sector banks and also PSU banks,” he said. He expects the full impact of rate cuts, CRR changes, and supportive government measures to flow through by then. He also remains optimistic on Reliance Industries and Jio Finance, citing strong fundamentals. On Kotak Mahindra Bank and Shriram Finance, Thakkar said both are attractive, with Kotak likely seeing a bottom in NIM compression and Shriram benefiting from fixed-rate lending. However, he maintained preference for larger private banks with stronger deposit franchises. In conclusion, while short-term volatility remains, Thakkar believes India’s banking sector—led by HDFC and ICICI—stands at the cusp of a robust growth cycle.