Positive on NBFCs and power financers, pharma growth strong: Daljeet Kohli – News Air Insight

The Indian markets are seeing selective moves in the banking and financial services sector (BFSI), with private banks posting gains. However, Daljeet Kohli, Head of Equities at Roha Asset Managers LLP, believes investors should remain cautious on banks in the near term, even as broader opportunities exist within financial services and pharma.

Speaking to ET Now, Kohli said that while private banks have shown strength with the private banking index rising over 2%, concerns remain around asset quality. “In the last two quarters, we saw pressure on asset quality across most banks. Microfinance loans and small-ticket personal loans— Rs 3–10 lakh—have been particularly weak. On top of that, when the rate cut cycle begins, net interest margins (NIMs) will face pressure. This is likely to continue for the next one or two quarters,” Kohli noted.

He added that valuations for banks could become more attractive after this consolidation phase. “That will be the time to re-look at banks. For now, we are positive on the financial services space, especially NBFCs and power financers, where structural growth stories are intact,” he said.

Pharma outlook stays positive despite tariff concerns

On the pharma sector, Kohli maintained a bullish stance, despite global tariff-related concerns. “We have exposure to three–four pharma names. Some cater to the US and regulated markets, while others are domestic players. We believe US tariffs will not significantly impact Indian pharma companies because they operate on thin margins. Any additional costs will likely be passed on to customers. Moreover, US buyers’ dependence on Indian generics is so high that they cannot afford disruptions,” Kohli explained.

Domestically, the Indian pharmaceutical market (IPM) has seen muted growth in recent months, but Kohli expects a rebound. “After the floods and natural calamities across parts of India, there tends to be a surge in demand for anti-infectives and related drugs. So, we expect domestic pharma growth to pick up as well,” he said.

Key takeaways for investors

Banks: Short-term asset quality and NIM pressure; valuations may turn attractive in coming quarters.
NBFCs & power financing: Remain structural growth plays.
Pharma: Strong long-term fundamentals, tariff concerns likely to have limited impact.
Domestic pharma growth: Expected to improve post-natural calamities.

With BFSI facing near-term headwinds and pharma showing resilience, Kohli suggests a segment-specific investment approach, focusing on NBFCs, power financers, and select pharma companies.