Shiv Puri’s Take On What’s ‘Amazing’ And What Investors Must Avoid

“While everyone is focused on reading the headline and discerning the moratorium number for this month and next month, they’re forgetting the inherent strength of these businesses,” he told BloombergQuint at a time when the extended moratorium on loans and equated monthly instalments as a result of Covid-19 is making investors nervous about an increase in bad loans.

Puri, formerly with Bain Capital, Crescendo Ventures and Morgan Stanley, has been investing in public markets since 2001, as per the TVF website. He acknowledges that the country will “undoubtedly” see higher non-performing assets. However, data that comes out after another six months will show that the situation wasn’t as bad as expected, he said.

Select financial names have all the basics—solid franchise, capital, understanding of risk—in place and are now leveraging technology to stay connected to the consumer even under a lockdown, he said, without taking their names.

Moreover, their business fundamentals are likely to improve in the aftermath of the Covid-19 crisis. Banks will probably have higher return on equity because of fewer competitors, he said. Some of the big high quality banks are also seeing a flood of CASA (current and savings accounts), benefiting them disproportionately, Puri said. “They look amazing from a longer-term view.”

Financials also offer a long runway of high-quality growth which make their valuations, currently perceived as high, relatively cheap in the long-term perspective, he said. The firm’s own analysis of the stocks shows that returns over a 5-10 year period are very respectable. “You’d be compounding in high teens and early 20s,” Puri said.

On the flipside, the investor is avoiding capital intensive businesses such as airlines, real estate and metals. TVF Capital is only focused on financial and consumer businesses, he said.

Watch the full conversation here: