You are choosing a financial space and you were guaranteed some of these small tickets from the NBFC sides. Recent news flow gives us a little sense of how these news flow can be a big booster for these companies.
Abhay Agarwal: This is an excellent example of talking. Since the beginning of this year, we have been hearing about the objective of the government, and there was never doubt to promote growth in view of the bottom part of the pyramid.
What we have seen after the budget is that tax cuts and liquidity were then brought by RBI and today’s front load rate cut. This is an excellent example of walking, giving participants a lot of trust in the market that the government means business. Last year, the RBI tightened the liquid.
I think it was a mistake that has now been corrected. Therefore, our condition was that due to very strict credit control actions by the RBI last year, many small banks, SFBs and insecure lender, who are a good lender and the pyramid borrowers meet the very crucial need of the bottom of the borrower, but who do not have safe, but cash flow. There are many small tickets orrow borrowers, who are willing to pay, and not intentionally defaulters. But due to delayed payments, they were considered as NPAs. I thought it was an accounting thing that would improve itself. I think that is where we move on.
These many small finance banks, small NBFCs that were beaten due to poor results in the March quarter will now return as credit flow will begin. There is pressure to transmit rate reductions from the RBI Governor and not to make banks all margins. Overall, our investment thesis has become stronger. A few months ago we added to our model portfolio about the five or six banks, we are very happy that we did what we did later and I hope that these rates will now start a very virtuous economic cycle of consumption, and then lead to private capex, employment and more consumption. All markets are cheerful for the same thing.
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What is your vote on the real estate sector? What kind of move are you looking forward to the real estate field? If the demand you refer to, there is an increase in consumption. So, if the demand for the real estate space increases, when it comes to Industrial Dysfunction and production space, will there be an uptick?
Abhay Agarwal: The real estate sector is one of the most sensitive areas for two reasons. One, builders borrow themselves to make and they always take advantage. Therefore, any rate cuts are a very positive situation for their balance sheet and their P&L statement. It gives them the ability to borrow more and build faster and also help on the customer’s side.
You used to make a very interesting point on the real estate pack that it is one of the most interested sensitive fields/ how you look at the next step, a day in which these counters are anywhere between 6% and 7%, do you believe that we can now expect?
Abhay Agarwal: The whole markets will go to the new S. There is no reason for them. Many problems, at the beginning of this year, we have many issues behind us basic and technically. In the real estate field, there is a huge pants-up demand. I mean, as a developing country, the kind of people we have, the number of families of their numbers, the first ambitious ambition is owned by your own home and you can be a different class.
You can choose to build a home in a small city, you want to buy a condominium or penthouse in a big city – it’s everyone’s dream and aspiration. Therefore, this is the area that really does not pay its outstanding payments because it is infected by archaeological government policies related to the rules that most of them are unnecessary approvals, costs costs of approvals, high practical costs. It is time that the government takes a very intense look at this whole area and ensures that there is less regulation and it is faster for developers, it is easier to buy cheaper to buy customers.
I am very optimistic that this government. Especially with their AWAS plan plans, it will support. I’m quite optimistic that we will see more announcements going forward to the real estate area and continue to drive in real estate stocks.
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