Prabhudas Leeladhar’s Amnish Aggarwal noted the instability in trade relations with the US. “The position of your trade parameters with the US is very volatile. Now, we have got some interim arrangement, but as we have seen in the last one year, nothing can be said with certainty because this is not just an India problem, it is a bit of a geopolitical problem as far as your tariffs are concerned. At this point, I would be very careful how we do not lose if we lose to the US. The situation we are in should be satisfactory to the country, including Including the EU, where we are getting better terms of trade based on US tariff policies and other geographic factors, I believe overall market volatility will continue in the near term.
On the impact of artificial intelligence on IT services, Agarwal highlighted the uncertainty surrounding business models and profitability. “It’s very uncertain because it’s not the beginning of AI or the transformation, it’s not the end of it, but it’s just starting to get noticed and have some impact. We’re not at a stage where companies are starting to slow down or have margin pressure. So, this is a big reset. I don’t think it’s going to settle down in one quarter and how the market needs to wait and see a quarter and two of the big impact. Uncertainty really hates.
Turning to financial services, Agarwal discussed the potential to unlock value in digital lending platforms. “One needs to look at it from three angles. The objective is to use the cash flow that the company throws at it, and because you are in telecom, we already have the digital platform and the tech stack. They are expanding it to make it bigger than it is today. The biggest issue is how is your screening process and how do you handle credit, collections and they access the money and Gioco through their mobile network. As far as value unlocking is concerned. Relatively, it is too early, but it is not a good initiative to use so much cash, because other segments will also affect the financials and value.
On IDFC First Bank, which recently saw its shares take a 16% hit, Agarwal emphasized perspective over panic. “We don’t have a formal rating on the stock, but the 590 crore hit is not that big compared to the balance sheet. However, it raises questions on the processes and systems in place in the organization, which they need to address. Usually, there is panic initially, but if they manage the situation well and the deposit franchise is intact, things should recover over time.”
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In the auto sector, Agarwal saw mixed but generally positive momentum. “The auto sector shifted gears soon after GST. The last three to four months have been quite strong. Two-wheelers were already doing well, but for PVs, the big push came later. Logically, the momentum should continue, but last month Maruti showed flat volumes for small cars, while M&M did well in SUVs. Some entry-level cars and two commercial cars could outgrow it. The agriculture sector, however, remains strong, El Nino may impact the upcoming monsoon and demand for tractors, selection is key in the auto space.
Agarwal also shared his opinion on metals. “In the ferrous space, demand is good, and profitability is likely to improve in Q4. From current levels, additional returns are possible. For non-ferrous, like aluminium, we have already seen the best, with companies like Hindustan Zinc leading the price action. Ferrous is a space where we are still positive.”
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