Raamdeo Agrawal is a veteran stock picker who has seen many bull and bear markets. One can be sure that his advice is backed with real-life experience.
In his interview to ET, Raamdeo Agrawal expressed confidence that PSU Banks presented values across the board. He explained that their business segments are corporates, large and SMEs and that there is no dearth in their credit growth and pre-provisioning profits. The problem was in the credit cost. However, that is a cyclical thing, he explained and pointed out that when the economy is in a bad shape, there will be a fat credit cost.
Raamdeo Agrawal pointed out that the market had got unduly pessimistic that the PSU Banks would get submerged in those credit losses and that nothing can alter the situation. At the height of pessimism, the stocks start selling very cheap.
Raamdeo Agrawal explained that his hypothesis was that as the economy recovers and the RBI starts loosening the interest rates, credit cost will start coming down. Then, all of a sudden, there will be a change of opinion. Prices change not because of the earnings but because of the change of the opinion and sentiment. When the sentiment starts changing, large and popular banks will become the multi-baggers of the year, he said with confidence in his voice.