Markets are 'overpricing' the risk to Indian lenders from their exposure to Adani Group, which was targeted last week in a report by short-seller Hindenburg Research, Societe Generale said, adding that a sell-off in banking shares seems overdone.
"Moreover, our stress test signals no systemic risk for banks even in an adverse scenario."
Assuming no significant change in the debt structure over the past year, SocGen estimated that Indian banks' loan exposure to Adani was close to $10 billion, just 0.6% of total banking sector loans at nearly $1.5 trillion. It said Indian banks were among the "best positioned" to gain from a rebound in capital expenditure and said it expected more "favourable" valuations post the correction.in the year to March 2024, as a post-pandemic retail boom and recent bank balance-sheet repairs lure new investment, fuelling demand for everything.
"With the sector valuation having dropped back to its 2.3 long-term average, we see a good opportunity to add exposure to India's banks post the recent Adani-triggered correction, and to private banks in particular," SocGen strategists said.
Australia Latest News, Australia Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Breakingviews - Adani’s financing safety-net rests on Indian banksGautam Adani’s financing options are narrowing fast. Investors wiped $48 billion off the Indian tycoon’s listed companies in just two days last week; his flagship Adani Enterprises lost 19% of its value on Friday alone. While the nationally important ports-to-power-to-roads group should be able to manage its interest bill, the selloff blows apart Adani’s plans to tap global capital markets. That leaves it dependent on a safety net provided by Indian banks.
Read more »
Indian shares slip, tracking financials as Adani stocks extend slideIndian shares fell in a volatile session on Monday, mirroring the financials ahead of the Union budget as Adani Group extended a decline after a short-seller attack on group companies triggered a sell-off over the previous two sessions.
Read more »
Indian shares snap losing streak as key Adani stocks cap lossesIndian shares struggled for direction in a volatile session on Monday, ahead of the Union budget, as select Adani stocks arrested the slide after a short-seller attack on group companies triggered a sell-off over the previous two sessions
Read more »
Financials lead Indian shares lower; Adani stocks, econ survey in focusIndian shares declined after a volatile opening on Tuesday, the final day of Adani Enterprises' mega secondary share sale and ahead of the country's annual pre-budget economic survey.
Read more »
Adani Taps Indian Nationalist Fervor To Salvage His Empire As He Slides In Billionaire RankingsThe Adani Group has tried to paint serious allegations of fraud it faces as a “calculated attack on India” and its growth story.
Read more »
Bill Ackman warns banks face 'liability exposure' from Adani share saleBill Ackman says banks involved in the Adani Group's $2.5 billion share sale face 'too much liability exposure' and should do more due diligence
Read more »