SBI Funds Management Stock: SBI Funds Management has emerged as one of the stocks that market expert Gurmeet Chadha of Complete Circle Consultants is watching closely, even as the asset management company’s shares have remained under pressure following a tepid listing.
In an exclusive interview with ET Now, Chaddha has said that SBI Funds Management is a strong franchise and it could benefit from rising mutual fund penetration in India.
Gurmeet Chadha has said that SBI Funds Management is the largest fund house with assets under management of more than Rs 12 lakh crore. According to him, the stock offers an opportunity to participate in the growth of India’s mutual fund industry.
“We like SBI Funds. I think it is a very tepid listing and I think the stock is now below the IPO price,” Chadha said.
“The expiry of the one-month anchor investor lock-in was another factor being watched by investors,” he added.
SBI Funds Management valuation
“This is something we like. We are looking forward to the NSE IPO as an analyst,” Chadha said.
According to him, asset management companies can act as a beta play on a rising market because management fees are linked to market-linked assets under management.
Market share remains a concern
While Chadha remains positive on SBI Funds Mnagement and he said, “The fund house has lost some market share and that performance in some categories has slipped.”
He said such phases can happen with large fund houses and cited the experience of HDFC and ICICI before the Covid period as examples.
However, he believes the strength of the SBI Funds Management franchise and the broader growth in mutual fund penetration could support the company over the longer term.
Earnings momentum is back, says Chadha
“The momentum is well and truly back and it’s come back after almost two to three years now,” Chadha said.
Sectors Chadha is bullish on
Beyond SBI Funds Management, Chadha has identified several sectors that he believes offer investment opportunities, including power equipment, capital goods, defence, select mid-sized banks, precision engineering and auto ancillaries.
He said, “Power equipment and capital goods companies have strong order books, while defence remains a long-term opportunity despite elevated valuations.
On railways, Chadha said the opportunity remains structural, although investors should be prepared for lumpiness because of the business-to-government nature of the sector.
Banking sector offers value
Chadha also highlighted banking as a stronger tactical opportunity, pointing to valuations of leading banks and improving credit growth.
“I have not seen Bank Nifty at 11 times. Look at the valuations of some of the leading banks, including SBI, HDFC, ICICI. I think most of them have a lot of value here,” he said.
He expects improving bank credit growth and solid asset quality to eventually reflect in stock prices.
On the IT sector, Chadha said investors need to remain selective instead of buying companies merely because valuations appear attractive.
He said his portfolio has only limited exposure to the IT sector and that he is tracking select mid-cap names.
(Disclaimer: The above article is meant for informational purposes only and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money-related decisions.)
