raamdeo agrawal: If profits remain the same, the market will find equilibrium somewhere: Raamdeo Agrawal

Every nation revolves around how strong its banks are. If your finances are very strong, the country will probably do well. This time, after eight to ten years, the balance sheets of companies are clean, and the balance sheets of banks are clean and well-equipped” Ramdeo Agrawalpresident, Motilal Oswal Financial Services Ltd, On the sidelines of the Economic Times Awards for Corporate Excellence in Mumbai on Saturday.


How do you see the market? Is there a tail wind or a headwind?
So there’s a headwind, there’s a tailwind. Headwinds on the earnings side and headwinds on the multipliers side because as interest rates rise, the multipliers are supposed to shrink. But it would be a very segmental type; Some places where the multiples are very high are shrinking and the markets in general are likely to see fewer multiples, but profits are accelerating. Therefore, if profits remain the same, the market will find equilibrium somewhere.

Read also: Expect more price hikes; GDP could fall by 1-1.5%: Ajayi Piramal

Five to six years ago, you said earnings growth is rare. Right now, isn’t earnings growth across the industry that rare?
Larger sectors like BFSI are back. PSU banks are back in a big way. Every nation revolves around how strong its banks are. If your finances are very strong, the country will probably do well. This time, eight to ten years later, corporate balance sheets are clean, and banks’ balance sheets are clean and well-equipped.

I think we are in a very good credit transition cycle; The demand for credit should go up, the cost of credit would go down, we should have a huge profit growth from the banking sector as a whole and the valuations are reasonable. We have kind of a tailwind in the economy except for this war and inflation. No one can predict how inflation will form.