
Mid and smallcaps expensive, selectivity crucial for investors: George Thomas
stock picks
because broader
market valuations
are not cheap. Compared to the strong returns of the past three to five years, returns over the next couple of years might be lower, although still reasonably healthy," says George Thomas, Quantum AMC.
If you look at the six-month trajectory, the market is still up by 6%. How do you see the market moving in the near term and the long term with respect to the Nifty and Sensex? More importantly, which sectors should investors consider if they want to allocate capital now?
George Thomas:
If you look at the recent market performance, it's driven by a few key factors. Firstly, the earnings profile of companies has been somewhat muted. For the March quarter, aggregate revenue growth was in single digits—around 6-7% for the BSE 500—while margins remained steady. In such an environment, valuations weren't supportive enough to generate high returns.
Explore courses from Top Institutes in
Select a Course Category
healthcare
Data Science
Public Policy
Data Analytics
PGDM
Finance
Cybersecurity
Healthcare
Data Science
Leadership
Management
Degree
Design Thinking
MBA
others
MCA
Others
Operations Management
Project Management
Technology
CXO
Digital Marketing
Product Management
Artificial Intelligence
Skills you'll gain:
Duration:
11 Months
IIM Lucknow
CERT-IIML Healthcare Management India
Starts on
undefined
Get Details
by Taboola
by Taboola
Sponsored Links
Sponsored Links
Promoted Links
Promoted Links
You May Like
The Top 20 Most Expensive Cars
LuxYouDesire.com
Undo
However, looking ahead, we believe a few positive triggers are emerging. For one, the higher-than-expected rate cuts could eventually boost consumption and support some capex projects that may materialize in the coming quarters. The monsoon has also been reasonably good, which should benefit the rural economy. Irrigation activity and kharif sowing have shown healthy trends. With these factors, along with a relatively low base for FY25, we expect things to improve from here.
That said, investors should be selective in their stock picks because broader market valuations are not cheap. Compared to the strong returns of the past three to five years, returns over the next couple of years might be lower, although still reasonably healthy.
Let's elaborate further on the broader markets—specifically midcaps and smallcaps. It doesn't seem appropriate to talk about both market caps in the same breath anymore. Let's discuss them separately. There was a time when investors earned good profits from these segments. Valuations had cooled off a bit, but are we now looking at a time correction in certain pockets? And how are you positioned from a sector-specific valuation standpoint in midcaps and smallcaps?
George Thomas:
For mid- and small-cap investors, selectivity is crucial because there is froth in many areas. In our Quantum Smallcap Fund, for instance, we are holding about 13% in cash—which is higher than usual—reflecting our caution about valuations in that space.
Live Events
Some of our recent additions have been in the
auto ancillary sector
and a company catering to the FMCG space. However, investors need to adopt a bottom-up approach—you can't generalize. One must be mindful of valuations and evaluate each company's story individually.
From a broader perspective, mid- and small-caps continue to be expensive compared to their historical averages. Not so much on a P/E basis, but if you look at price-to-book—an indicator of how profits compare to historical trends—there's clear evidence of froth. Hence, selectivity is essential.
The companies we've added in the auto ancillary space are gaining new clients, including both domestic and foreign auto OEMs, and are increasing their components per vehicle. So, investors need to be very selective in this pocket.
Let's shift focus to PSU banks.
Indian Overseas Bank
, for example, just reported a 75% rise in net profit to ₹1,111 crore, and the stock is up 2%. There's been a lot of action in
PSU banks
lately, especially with a 50-bps rate cut already in place and clarity emerging on the rate trajectory. How do you view this space going forward?
George Thomas:
We have been extremely selective in the PSU banking space. We currently hold just one PSU bank that has a large franchise and one of the lowest costs of funds. However, when you move further down the ladder, we believe that management and underwriting quality in many PSU banks do not match the best players in the sector.
We are constructive on the banking sector overall. Even though there could be some near-term margin pressure due to rate cuts, we believe the market has largely factored this in. The asset quality concerns we saw in segments like personal loans, credit cards, and MFIs seem to be behind us.
Looking ahead, we expect asset quality to remain stable, and current valuations have already priced in some of the expected margin compression. Compared to their historical averages, some banking names—particularly in the private sector—continue to offer attractive upside.
I'd like to bring your attention to the chemicals and fertiliser sector. With NITI Aayog recently releasing a roadmap to boost India's chemical industry, does this sector feature in your portfolio? What's your outlook considering the structural changes being proposed?
George Thomas:
We currently have no exposure to the chemical sector, primarily due to concerns around supply-side dependencies. Many of these companies are significantly influenced by how major Chinese suppliers behave, which adds unpredictability.
Moreover, it's hard to identify a sustainable moat in many specialty chemical companies. Their performance often hinges on regional dynamics, and given the scale of their operations, we don't see consistent structural advantages such as cost leadership.
While there could be selective opportunities, from a broader sector perspective, we have not found an attractive combination of valuations and fundamental strength. Hence, we have stayed away from this space in our portfolio.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
&w=3840&q=100)

Business Standard
22 minutes ago
- Business Standard
Looking for 15-20% returns? Silver is the new gold. Experts explain why
In a world increasingly defined by tech innovation, energy transition, and geopolitical uncertainty, silver is fast emerging as the new gold for investors seeking both resilience and returns. A new report by wealth advisory firm Client Associates, managing over $6.1 billion in assets, presents a strong case for silver as a strategic, dual-role investment asset that could deliver 15–20% returns in the next 12–24 months. Why Silver? Unlike gold, which is seen largely as a hedge against inflation and volatility, silver combines monetary value with industrial utility. According to the report, silver demand is surging from high-growth sectors like: Solar energy and green infrastructure Electric vehicles (EVs) Semiconductors and 5G At the same time, mining and recycling supply remains constrained, causing a global supply deficit for the fourth year in a row—to the tune of 149 million ounces in 2024 alone. Silver currently trades at a gold-silver ratio of 90, compared to the long-term average of 68. This makes silver appear undervalued, especially if gold prices stabilize. Over time, silver has shown low correlation with Indian equities (0.21 with Sensex) and moderate correlation with gold (0.72), helping balance risk in diversified portfolios. "Silver is no longer just a precious metal—it is a modern asset class," says Nitin Aggarwal, Director – Investment Research at Client Associates. "It brings together industrial relevance and historical trust to offer a compelling dual advantage.' The Investment Case for Silver Silver's unique market dynamics, risk profile, and investment potential Supply Dynamics • Despite a 1.7% year-on-year increase in global silver supply to 1,015.1 million ounces (Moz) in 2024, the total demand, which stood at 1,160.1 Moz, resulted in a supply deficit of approximately 149 Moz (about 15% of total supply). This marked the fourth consecutive year of a silver market shortage. • As a result, silver prices are being supported by strong structural tailwinds, driven by rising demand from new-age sectors - such as solar energy, electric vehicles, & electronics with amidst a deficit supply Demand Dynamics • In 2024, total silver demand declined by 2.8% year-on-year. This decline was primarily driven by weakness in net physical investment, silverware, and photographic applications. • However, the industrial demand (electrical & electronics, brazing alloys & solders, and other industrials) increased by 3.6% y-o-y, marking the fourth consecutive year of record highs and providing strong support to silver prices. Over the long term, global silver demand has grown at a CAGR of around 2% from 2016 to 2024. Client Associates also highlights silver's role as an effective portfolio diversifier. It has low correlation with Indian equities (0.21 with the Sensex) and a moderate correlation with gold (0.72), allowing it to complement both equity-heavy and gold-heavy portfolios. Over longer horizons, gold and silver returns tend to converge, but silver offers higher short-term return potential—albeit with greater volatility and sharper drawdowns. From a portfolio construction standpoint, silver can play both a defensive and opportunistic role. While gold remains a preferred hedge in uncertain times, silver's linkage with industrial growth makes it well-suited for tactical allocations aligned with long-term global themes like decarbonization, digitalisation, and infrastructure upgrades. Risks to Watch The silver story isn't without caveats. The report warns investors of: Potential increase in mining output, which could ease the supply crunch Global slowdown that could reduce industrial demand Material substitution in key industries like electronics and solar How to Invest in Silver Depending on investment goals and logistics, here are viable options: Silver ETFs: Great for short-term tactical plays; Demat required Silver ETF Fund-of-Funds (FoFs): Better for long-term passive investors; no Demat needed For investors with Demat accounts and shorter investment horizons, Silver ETFs are a cost-efficient and tax- advantaged route. For Indian investors building a goal-linked portfolio, silver can serve as a growth-hedge hybrid—especially relevant in a world that is digital, decarbonized, and geopolitically unpredictable. From a portfolio construction standpoint, silver can play both a defensive and opportunistic role. Why Silver Deserves a Place in Your Portfolio 15–20% return potential in 1–2 years Structural supply deficit + industrial demand boom Diversifies equity and gold-heavy portfolios Ideal for both short-term and long-term allocations Over longer horizons, gold and silver returns tend to converge, but silver offers higher short-term return potential—albeit with greater volatility and sharper drawdowns.


Time of India
36 minutes ago
- Time of India
Indian-origin Shailesh Jejurikar to lead P&G as Global CEO: How Mumbai University and IIM Lucknow shaped his rise
On January 1, 2026, Shailesh Jejurikar will take over as President and Chief Executive Officer of Procter & Gamble (P&G), succeeding Jon Moeller. Based in the United States, P&G is a global leader in consumer goods, known for brands such as Tide, Ariel, Pampers, Gillette, and Head & Shoulders. Jejurikar's appointment is a milestone for the company and a moment of pride for Indian-origin professionals on the global stage. From a young man in Mumbai to the first India-born leader of a company that serves billions of consumers worldwide, Jejurikar's journey is a case study in how education, consistency, and global curiosity can converge over decades to shape world-class leadership. From Mumbai to IIM Lucknow: Jejurikar's early education Born in Mumbai, Jejurikar began his academic journey at Mumbai University, where he pursued a Bachelor of Arts in Economics. At a time when Indian higher education was largely focused on theoretical learning, he used this foundation to build analytical depth and economic awareness. These were the very skills that would later define his strategic contributions to one of the world's most iconic consumer goods companies. However, it was at the Indian Institute of Management Lucknow, where he earned his Post Graduate Programme in Management (Master of Business Administration) in 1989, that his business acumen was sharpened. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Your New Zealand escape starts with Singapore Airlines Fly with Singapore Airlines Book Now Undo As part of one of the early batches of IIM Lucknow, he emerged from a relatively young institution with a mindset geared towards scale, systems thinking, and organisational impact. This dual education, first in liberal economics and then in structured business leadership, offered a balance of insight and execution that would remain a hallmark of his rise through the ranks at P&G. Jejurikar's path to global markets Jejurikar joined Procter & Gamble in July 1989 as an Assistant Brand Manager for Personal Health Care in India. In the corporate world, few careers have the kind of uninterrupted trajectory that his does. From managing skin care brands in India in the early 1990s to holding marketing and director-level roles across East Africa, Kenya, and later Asia-Pacific, he steadily grew into regional and global leadership roles. At every stage, his education translated into more than just managerial capability. It allowed him to navigate diverse markets with cultural intelligence and business foresight. Between 1996 and 2008, he served in a series of leadership roles across continents. From Marketing Director in India to Vice President roles in the Association of Southeast Asian Nations (ASEAN), Australia, and Korea-Singapore markets, Jejurikar was repeatedly entrusted with expanding business in developing regions. Each role demanded not only marketing strategy but also cross-border operational judgment and team-building. These were a direct result of the leadership foundations laid during his time at IIM Lucknow. Leading with scale and vision The transition from regional to global leadership came in 2010 when he was appointed Vice President for Home Care, North America, and Brand Franchise Leader for Surface Care. Over the next few years, he took on roles that included President of Fabric Care for North America and head of Global Fabric and Home Care Brand Building. These roles placed him at the center of P&G's innovation pipeline, especially in product categories like Tide, Ariel, Downy, Gain, and Febreze. These brands represent nearly a third of the company's total sales and net earnings. His most defining leadership chapter began in 2019 when he was appointed Chief Executive Officer of Global Fabric and Home Care and also named Executive Sponsor for Global Sustainability. These dual responsibilities reflected the company's trust in his ability to align business growth with environmental and social accountability. By 2021, he rose to the position of Chief Operating Officer with profit and loss responsibilities for Enterprise Markets across Latin America, India, the Middle East, Africa, Southeast Asia, and Eastern Europe. He also oversaw global operations in information technology, sales, distribution, manufacturing, and new business creation. A blueprint for future leaders Even at the executive level, Jejurikar remained committed to the principles that shaped his education. These included a focus on impact, stakeholder value, and innovation. His leadership has consistently been marked by the ability to identify growth possibilities by understanding consumer needs in new, better, and more complete ways. These values, shaped early in his academic and professional life, guided his decisions in transforming not just brands but also business models, supply chains, and global team culture. As he prepares to take on the role of President and Chief Executive Officer of P&G, he stands as a symbol of what India's management education can produce at the highest level of global enterprise. His journey from Mumbai University and Indian Institute of Management Lucknow to the boardrooms of Cincinnati is not just a tale of professional ascent. It is a reminder that academic grounding, when paired with long-term vision, can shape leaders for decades to come. For students aspiring to lead global businesses, Jejurikar's story offers both inspiration and a blueprint. Invest in your learning, and never underestimate the power of adaptability rooted in strong fundamentals. TOI Education is on WhatsApp now. Follow us here . Ready to navigate global policies? Secure your overseas future. Get expert guidance now!


Time of India
39 minutes ago
- Time of India
Apparel, F&B drive 54% of leasing in H1 2025 as millennials and Gen Z shape India's retail future
India's retail real estate is undergoing a dynamic transformation, driven by shifting consumer behaviors and preferences—particularly among Millennials, Gen Z , and even Gen Alpha. These generations are redefining retail by prioritizing convenience, digital integration, and meaningful brand experiences. According to the latest research by ANAROCK, apparel and food & beverage (F&B) brands have emerged as the two dominant retail categories in terms of leasing activity. Explore courses from Top Institutes in Please select course: Select a Course Category Others Management Healthcare Leadership Operations Management Data Science Degree CXO PGDM Technology Design Thinking Public Policy Digital Marketing Artificial Intelligence Data Science Project Management Data Analytics Product Management Skills you'll gain: Duration: 7 Months S P Jain Institute of Management and Research CERT-SPJIMR Exec Cert Prog in AI for Biz India Starts on undefined Get Details Skills you'll gain: Duration: 28 Weeks MICA CERT-MICA SBMPR Async India Starts on undefined Get Details Skills you'll gain: Duration: 28 Weeks MICA CERT-MICA SBMPR Async India Starts on undefined Get Details Skills you'll gain: Duration: 28 Weeks MICA CERT-MICA SBMPR Async India Starts on undefined Get Details Skills you'll gain: Duration: 28 Weeks MICA CERT-MICA SBMPR Async India Starts on undefined Get Details Skills you'll gain: Duration: 28 Weeks MICA CERT-MICA SBMPR Async India Starts on undefined Get Details Skills you'll gain: Duration: 7 Months S P Jain Institute of Management and Research CERT-SPJIMR Exec Cert Prog in AI for Biz India Starts on undefined Get Details Skills you'll gain: Duration: 28 Weeks MICA CERT-MICA SBMPR Async India Starts on undefined Get Details by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like This Could Be the Best Time to Trade Gold in 5 Years IC Markets Learn More Undo Together, they accounted for 54% of total retail leasing—roughly 2 million sq. ft.—across the top seven Indian cities in the first half of 2025. This marks a sharp rise from their combined 37% share in 2023, signaling a significant shift in expansion strategies across the retail landscape. "Individually, the leasing share of apparel—currently the top leasing category—has declined from 42% in FY19 to 37% in FY25 and is expected to fall further to 32% by FY30,' said Anuj Kejriwal, CEO & MD of ANAROCK Retail. 'On the other hand, F&B has grown from 8% in FY19 to 12% in FY25, and we project it will rise to 16% by FY30.' Live Events Online disruption vs. experiential consumption The decline in apparel leasing reflects broader pressures faced by traditional retail formats—particularly from e-commerce and the rise of quick commerce. Value-based segments such as hypermarkets and fast fashion are increasingly losing ground to digital alternatives that offer doorstep delivery and competitive pricing. In contrast, experiential and high-value categories such as F&B, beauty and wellness, sports, and jewellery are gaining favor. 'Jewellery, for instance, grew from a mere 2% leasing share in FY19 to 5% in FY25, and is forecasted to hit 13% by FY30,' Kejriwal added. These changes reflect evolving customer expectations. While older generations prized trust and brand loyalty, today's consumers demand personalized experiences, fast service, and emotional resonance—often driven by what they see on social media and digital platforms. H1 2025 leasing snapshot Among the 2 million sq. ft. of net retail absorption in H1 2025: 33% was taken up by apparel brands 21% by F&B 16% by entertainment zones 11% by home & lifestyle brands This distribution highlights the changing priorities of both retailers and consumers, as malls and retail spaces pivot to include more experiential zones and diversified offerings. The future of retail is personalized and tech-driven The data clearly shows how Indian retail is realigning with today's customer habits and preferences. While previous generations valued brand loyalty and word-of-mouth recommendations, Millennials and Gen Z value convenience, personalization , and emotional connection. "We can see an unequivocal preference for quick, customized, valuable experiences clearly influenced by digital platforms and social media," says Kejriwal. "This change is pushing retail beyond traditional stores to tech-enabled, customer-focused formats. The aspirations of today's tech-savvy, fast-paced consumers are the key to retail success now." As technologies like AI, automation, and sustainable retailing gain prominence, the role of physical stores is being redefined. Retailers must now go beyond transactions to create meaningful connections with their audience. Flexibility, storytelling, and purpose-driven branding are fast becoming the cornerstones of modern retail success. ( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)