IndusInd Bank: Post-Turbulence Consolidation
Speaking on IndusInd Bank, Haria noted that the lender seems to have turned a corner after a challenging two-year phase.
“IndusInd Bank has just got a new MD. They have come out of a lot of issues in the last two years. So, the quarterly results suggest that most of the issues the hit has been taken,” he said.
However, he cautioned that the bank is now in a phase of internal consolidation. “Whenever you go through such tough times the bank internally goes into consolidation… they will review all of their processes, their focus areas. They will do some cost rationalization.”
While the worst seems to be behind the bank, he believes it will take time for growth momentum to return. “It will take some time for them to perform. The environment is good. But I still think they will take some more time to perform,” Haria said, adding that the stock may remain range-bound for the next six to nine months until the new management articulates its growth strategy by December.
Life Insurers: Rerating Done, Now Market-Linked Returns Ahead
Turning to life insurance companies, Haria observed that the sector has already undergone a phase of rerating after three years of underperformance. “They gave one good round of rerating or a catch-up trade and now the growth is still lagging somewhere between 12% to 13% for a sector,” he said.
He explained that earlier expectations of 15-16% secular growth are no longer realistic. “This will more be like a market return kind of a sector from here on.” While he highlighted Max Life as having “more juice than market returns at least in terms of the business uptick,” Haria maintained that smaller banks and NBFCs are likely to outperform the sector over the next year.
Reliance Industries: Strong Businesses, Limited Upside
On Reliance Industries, Haria’s outlook remained cautious despite steady performance across segments. “It will probably do nothing. That is what we think,” he said candidly. He elaborated that the company’s traditional businesses such as oil refining are “not really doing bad and not really doing great,” but scale itself limits growth. “At this size, for a company to grow more than 8-10%, it is going to be very difficult.”
Additionally, Haria noted that Reliance’s fast-growing divisions — Jio and Retail — have already seen significant stake sales. “Wherever there is fast growth, they have less stake and wherever the growth is slow, that is where there is more stake. So, fund managers will conveniently do better by ignoring or being underweight on Reliance for a few more quarters at least.”
HDFC Bank: Value Play Emerging, But Growth Catch-Up to Take Time
Discussing large private banks, Haria highlighted that valuation gaps between HDFC Bank, Kotak, ICICI, and Axis Bank could present selective opportunities. “Absolutely, there is,” he said, referring to a possible value play in HDFC Bank.
“After the merger they had to raise deposits in an environment where deposits and liquidity was not very easy… they slowed down their growth massively over the last five or six quarters. Now their CD ratios are somewhat manageable,” he explained.
While the bank now plans to grow in line with the industry, he remains realistic about rerating potential. “Growing at 12% still there is not so much rerating which the Indian market gives. Indian market is all about whether you can grow 15% or more. ICICI is really doing that. Kotak should probably be in that league as well… and Axis because of its smaller balance sheet has a chance of catching up. HDFC I still think is so large that for it to really buck up on the growth, it will take a few more quarters.”
The Bottom Line
From Haria’s perspective, India’s financial sector remains broadly stable but uneven in momentum. IndusInd Bank is rebuilding, life insurers are settling into a mature phase, Reliance faces structural growth constraints, and HDFC Bank may need a few more quarters to regain its stride.
For investors, the message is clear — patience and selective positioning will be key in navigating the next phase of India’s market cycle.