The conversation began with banks, where questions were raised about the ability of lenders to balance loan growth with deposit mobilisation. ET Now highlighted concerns around HDFC Bank and ICICI Bank, pointing to issues such as loan-to-deposit ratios (LDRs). In HDFC Bank’s case, management has guided for an LDR of 85–90 percent, but calculations suggest that even 90 percent appears challenging given the current pace of deposit accretion. The broader concern extends beyond private lenders, with several banks, including PSU names such as Punjab National Bank, struggling to attract deposits despite strong loan growth.
Responding to this, Sandip Sabharwal acknowledged that deposit growth is a significant challenge across the system. He attributed this largely to liquidity pressures driven by persistent foreign institutional investor outflows and the trade deficit, which continue to drain liquidity from the banking system. According to him, even measures taken by the Reserve Bank of India on the liquidity front are being neutralised by these external pressures.
He added that PSU banks could face a bigger challenge going forward compared with private sector banks, as younger customers increasingly prefer private lenders. On HDFC Bank specifically, Sabharwal said that guiding for above-market growth while simultaneously bringing the LDR down to 85–90 percent appears unrealistic. In his view, one of the two targets is likely to be missed, either growth or the LDR target.
The discussion then shifted to non-banking financial companies (NBFCs) and their prospects for 2026. Sabharwal said NBFCs remain an attractive space, noting that most have managed to control non-performing asset accretion, which is a positive. He pointed out that NBFCs typically outperform banks during periods of easing interest rates or benign monetary policy, a trend seen last year and one that could continue.
Among his preferred names, Sabharwal mentioned L&T Finance, Mahindra Finance and Manappuram Finance, the latter being a potential turnaround candidate. He clarified that these are just a few examples and that several other NBFCs could also perform well.
Attention then turned to the QSR sector, which has seen a flurry of activity early in the year after a long period of silence. ET Now referred to the merger involving Sapphire and Devyani, as well as recent changes in shareholding at RBA, and asked for Sabharwal’s perspective.Sabharwal explained that the QSR space was once viewed as a high-growth segment, but subdued consumer demand over the past two to three years has resulted in slow growth across most formats. This has put stress on balance sheets and, in his view, was a key reason behind the Devyani-Sapphire merger, as the companies were struggling to turn profitable on a standalone basis. He said that if consumer demand picks up and costs are rationalised, performance could improve.
On recent stake sales, he said exits by private equity investors can have multiple explanations, including fund lifecycle considerations, making it difficult to draw firm conclusions. He also noted that the expected revival in consumer demand has lagged, despite income tax relief, GST cuts and a supportive monetary policy environment. Lingering effects of high inflation in previous years could still be weighing on consumers.
ET Now pointed out that exits in RBA have happened at progressively lower prices over time, suggesting stress in the segment and a lack of growth visibility. Sabharwal agreed that stock prices have corrected sharply but said future performance will depend on whether consumer demand revives. He emphasised that investor selling does not automatically imply a negative outlook for the business.
When asked about consolidation in the QSR space, Sabharwal clarified that recent developments largely reflect investor exits rather than operational consolidation, with companies continuing to operate as before. On the possibility of new strategic buyers, including family offices with exposure to the QSR segment, he said any such investment would likely be relatively small compared with the overall size of these companies, and the eventual impact would depend on who buys in and what strategy they adopt.
