Speaking to ET Now, Sunil Subramaniam, Founder & CEO, Sense and Simplicity laid out a clear and candid explanation for the lag in private banks. According to him, a major part of the story is already reflected in valuations. “A lot of it is in the price,” he said, noting how domestic institutional investors (DIIs) have been the steady buyers of banking stocks while foreign institutional investors (FIIs) have been offloading them. “When FIIs sell and especially a passive fund sells, 30-35% of that is the banking space.”
Subramaniam pointed out that DIIs have consistently faced a choice: allocate to attractively valued public sector banks or to private banks “priced to perfection.” That perfection, he explained, leaves virtually no room for mistakes. “A little bit of bad news, little bit that the growth is slipping, it means that they are always in a tense side.”
Public sector banks, by contrast, still appear inexpensive on a price-to-book basis and benefit from multiple tailwinds. He highlighted three major drivers for the PSU resurgence: strong government-led reforms, likely moves to raise the capital limit to 49%, and a renewed phase of consolidation that could lift select banks into global relevance. This, he said, will help them “access international capital more.”
The upcoming private capex cycle, where early momentum is already visible, could further tilt the scales. As SMEs and MSMEs ramp up expansion, PSUs stand best positioned. Private lenders, Subramaniam noted, have had mixed experiences lending to this segment, with NBFCs also feeling emerging NPA pressure. “Public sector banks know that space well and know how to ride that space.”
Despite the relative underperformance of private lenders, he does not foresee operational weakness. With credit growth already in double digits, earnings should remain solid in the near term—though lofty valuations leave “very less” margin for error.Passenger Vehicle Outlook: A Near-Term Pause Before Another Upcycle
On the passenger vehicle front, sentiment remains constructive even as the festive-season momentum begins to cool. Subramaniam acknowledged that industry leaders like M&M have dominated the narrative, but the broader PV segment is entering a predictable breather.
“They have seen a good leg up in the festival season. Now, there will be a bit of a lull,” he said, adding that demand is poised to revive strongly in February and March. Depreciation benefits toward fiscal year-end typically boost invoicing, and historically, “March and then the first two weeks of April… are very strong months for the passenger vehicles.”
Any short-term softness, he suggested, may actually offer an opportunity. With a GST rate cut expected to work its way through the system in the first half of next year, the segment could see sustained support. “Any temporary lull could be a good time to accumulate,” he added.
