Axis result a shocker but not an industry-wide phenomenon: Sudip Bandyopadhyay, Inditrade Capital

In a chat with ET Now, Sudip Bandyopadhyay, Group Chairman, Inditrade Capital, says the asset quality and exposure of Axis Bank to the troubled sectors was definitely high. ICICI also gota drag down along with Axis. Edited excerpts:

ET Now: Want your perspective on banks. Would Axis Bank be prefixed to what we could hear perhaps from the PSU banks or do you think Axis was a standalone case in itself because their corporate book is so skewed towards the beleaguered sectors -- power as well as steel?
Sudip Bandyopadhyay: Axis Bank was definitely a shocker. What I did not like about the Axis Bank NPA story is that the assets which slipped from a good side of the book to the bad side and which were not on the watch list which has been progressively expanding. It does not create a very comfortable situation. Last quarter, you thought that probably the worst is behind the bank now again you see this huge NPA issue and it is compounding.

The non watch list assets getting into trouble is really worrisome. It erodes the credibility of the watch list itself and makes the entire asset book questionable. I am a little worried on the Axis Bank front for the way the results have come. Having said that, every bank will definitely not be a similar story. The asset quality and the exposure of Axis Bank to the troubled sector was definitely high. The market knows we all knew it and that is why probably ICICI is also getting a drag down along with Axis. Some of the PSU banks probably will get affected in a similar manner but by and large the asset quality erosion will be limited. It will not be an industry wide phenomenon.

ET Now: What did you make of PVR because there the promoter has sold out but they have got a large player as well. Does this augur well or would you be sceptical because of the valuations?
Sudip Bandyopadhyay: Not really. I think it augurs well. In fact, the valuation was worrying and demonetisation was a worry but a few good releases and the demonetisation is a thing of the past as far as these exhibitors are concerned. PVR is a well managed company and is getting good shareholders and promoter diluting stake is not a matter of major concern.

ET Now: What result would you expect for HUL, ITC, Asian Paints, L&T and a few others -- a few key midcaps as well that one result that you are watching out for next week?
Sudip Bandyopadhyay: HUL is a bellwether for the FMCG stocks. The Q3 numbers are not expected to be great. In fact, Q2 itself was bad and post Q2, top line growth was not satisfactory and the demonetisation probably has its impact but still based on the dynamics, based on the opportunity for HUL to increase prices. There are lots of factors which may play out in HUL results and that will indicate how the entire FMCG pack will perform. Undoubtedly, one result which I am looking out for is HUL.

ET Now: UPL as well as Tata Elxsi – do track of any of these two and would have any expectations build in?
Sudip Bandyopadhyay: UPL is one stock which we are tracking. In fact, with the way things are moving plus the way their global operations are shaping up, we are bullish for the long term and recommending investors a buy. Also with the emphasis on agricultural sector, we are expecting good things for companies like UPL in the budget. So the agro related stocks of which UPL definitely is one is in our basket. I will be watching out for their results and I am hoping that the results are good and it is in my buying list.