What key factors make you such a strong advocate for the India growth story?
Three factors that will help India drive superior growth sustainably than rest of world are:
- Younger demography in an otherwise ageing world
- Neutral position in hostile geopolitical arena, and
- Cheapest access to data and renewable energy, key ingredient that fuels a digital world
How do you manage risk in your AGOS-1?
We actively manage risk through:
- Appropriate churning of portfolio,
- Changing cash levels of fund, and
- Changing mix of large and small cap stocks depending on market outlook.
What makes you so bullish on financial services and consumer services as a theme?
We are bullish on capital market service provider, owing to dramatic rise in financialisation of savings in India. We also are bullish on consumer service like hotel, and retail owing to shifting consumer preference from goods to service.
What is your take on markets at current levels? What do you see for FY25?
Market has pulled back nearly 10% on account of poor Q2FY25 results. Valuation has come off to median levels of past five years. Poor Q2FY25 is partly due to adverse weather and national election. This should reverse, and better growth likely from here on, that will drive market recovery.
Any sectors which you recommend investors to pare their positions?
Investors may look to lighten position in railway, defense, and highway related areas. Real estate sector too could struggle in near term.
Valuations in the small and mid-cap space can sometimes seem stretched due to market sentiment. How do you ensure that you are not overpaying for growth, and what are your criteria for determining a reasonable valuation?
We try to value growth stocks using PEG ratio and tend to avoid if PEG valuation goes past 1.8x.
Regarding sector rotation, is there a sector you avoided early on but are now interested in? Can you provide an example?
We had avoided bulk of Banks and NBFCs and may relook.