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Mint
22 minutes ago
- Mint
Markets with Bertie: India's healthcare sector is far from dead. It's thriving
Recent news that an Indian pharmaceutical company was paid a large sum of money for their research on a new cancer drug made Bertie quite happy. From the looks of it, this could be the first multi-billion novel drug to hit the global market whose foundational research was done by an Indian company. Bertie's exultation was partly from a sense of patriotism but also from having closely seen the founder's sheer tenacity in continuing the expensive research, despite the counsel of every 'market-type' to shelve it, Bertie included. It was with this sense of enthusiasm that Bertie attended the company's analyst meet. Now that he occupied the higher echelons of fund management hierarchy, attending analyst meets was below his pay grade but our man sees himself as someone whose sleeves are always rolled up. He expected to see only young analysts who would have no memory of the frenzy around patent expiry dates that led to bleary-eyed scrolling on Blackberrys to find out who bagged the coveted first-to-file approval. More out of habit than hope, Bertie scanned the room for a familiar face and was happy to see an old friend who had covered the sector for over two decades, quietly sitting in the corner. Although he was not a medical doctor, the man was generically referred to as 'doc'; a title collectively conferred on him by the industry in acknowledgement of his prowess with the healthcare sector. Bertie waved and pointed to the bar outside, making a sign of afterwards with his index finger. Doc nodded without losing focus on what the founder was saying. After the meet, the two gents found a quiet corner and, after catching up on their respective career trajectories, delved into the subject of healthcare sector. In keeping with his perch on the higher branches of the fund management tree, Bertie was familiar only with the top few names in the space and was of the view that nothing exciting was happening there. 'All dead, no?' Bertie ventured, channeling his battle-worn skepticism. 'Domestic market growing single digit and US still under price pressure.' Doc took a thoughtful pause and said, 'Yes and no'. Bertie sensed that a long discourse was coming up and instinctively looked for a chair. 'What you say about India and US markets is right and that's what matters for the large companies but there is lot of interesting stuff underneath.' Having found a chair, Bertie was now looking for pen and paper which he fished out of the goodie bag that the pharmaceutical company had given. 'See this company for instance' Doc said pointing at the gift bag. 'Innovative drug development; that's got little to do with the current growth in Indian and US markets. There are other companies that are consolidating drug distribution. Diagnostics and hospital companies have their own dynamic as well.' Bertie was busy making a tree diagram, with Doc reeling out company names and their main business lines. 'Then there is the hot space—contract development and manufacturing (CDMO); earlier a Chinese preserve but the changing geopolitical tide is benefiting Indian companies now. Specialized tech companies that support the global healthcare industry—that's another fast-growing space.' By now, Bertie was not able to keep up- his handwriting had become illegible. 'Wow!' is all he could muster. He already had a list of 25 names on his writing pad. But Doc was not done. 'And we haven't even talked of the big thing.' He paused for effect. 'Launch of generic version of the famous weight-loss drug in over 80 markets in 2026. Even with the price cuts, it will be a multi-billion-dollar opportunity and Indian companies will play a big role there.' On the ride home, Bertie was excited. He knew that, if ever there was a sector in which rolling up the sleeves gets rewarded, it was healthcare, and our man is determined to do just that. Bertie is a Mumbai-based fund manager whose compliance department wishes him to cough twice before speaking and then decide not to say it after all.
Mint
22 minutes ago
- Mint
Marketing's missing heart: Are brands losing the plot in the age of AI?
Late last year, a 'leaked" HR email from wellness platform Yes Madam showed the company firing two employees for reporting high stress. The mail was a marketing stunt to promote stress relief services, but the backlash was instant and brutal—It was criticized as tone-deaf and insensitive for trivializing job loss and mental health, dealing a reputational blow to the company. This wasn't an isolated incident. Increasingly, Indian advertising is stumbling through an identity crisis—hyper-targeted and AI-optimized on the surface, emotionally hollow at the core. From ads served next to tragic news stories to brands defaulting to generic performance content, the industry seems stuck in a loop: efficient, but forgettable. 'Retail is moving towards intelligent, not just personalized. That includes empathy, not just efficiency," said Isabelle Allen, global head of consumer and retail at KPMG International. 'Consumers today expect brands not only to understand their habits but to reflect their values." And yet, in a rush to optimize everything, emotional intelligence, the very thing that creates memorable brands, is becoming endangered. Sandeep Walunj, group chief marketing officer at Motilal Oswal, argues that financial marketing is one of the worst offenders. 'We're not just speaking to portfolios. We're speaking to fear, ambition, even guilt. But BFSI marketing has long buried that truth under numbers and charts. It needs to be more human." Even consumer brands that once built emotional moats are under pressure. 'The CMO's role today is no longer just creative. It's a business mandate," said Nikhil Rao, CMO of Mars Wrigley India. 'You're expected to understand every lever—sales, trade, R&D. That's important, but we also need to remember what builds long-term love for a brand." Rao's team is trying to balance that tension: 'Even our ₹1 Boomer gum carries our brand story. We don't chase scale at the cost of quality or trust." But many marketers aren't walking that line well. Asparsh Sinha, managing partner at an independent brand design and transformation consultancy Open Strategy & Design, puts it bluntly: 'When everything becomes a performance dashboard, brands risk becoming utilities instead of cultural actors. Data must be interpreted, not just applied." Sinha believes the anxiety is visible in client briefs. 'They're not more functional, they're just more nervous. Nervous about justifying spend. About defending quarterly outcomes. That fear pushes brands to play it safe—and safe is forgettable." Vishesh Sahni, chief executive officer of White, a brand experience company, says cultural fluency is the new metric. 'We worked on H&M's 'Sound of Style' activation at Lollapalooza India 2025. It wasn't built for virality, it was built for resonance. Gen Z doesn't reward attention-seeking, they reward authenticity." He adds that building emotional equity is still non-negotiable for serious brands. 'Some of our most memorable briefs are the ones focused on building brand words, co-creating culture with audiences, and forging a sense of trust and intimacy. The challenge is meeting emotional resonance with rapid results and this is where data helps sharpen the storytelling." Saheb Singh, strategy director at independent advertising firm Agency09, warns that performance marketing is making all brand voices sound the same. 'Optimizing for clicks has come at the cost of emotional nuance. The soul is being traded for speed." He adds, 'We treat even a six-second short as a brand moment. Short-form doesn't have to be short-lived. But it can't be soulless." Singh also believes that younger marketers sometimes over-index on tools rather than people. 'Great marketing begins with empathy. Tools are powerful, but empathy is irreplaceable." A Deloitte whitepaper on the evolving CMO mindset highlights that brands are under pressure to deliver immediate value, but long-term relevance comes from human-centric design. 'More than 80% of leading CMOs are embedding emotional, cultural and societal relevance into brand decisions," the report notes. 'Human-centricity isn't just a talking point—it's a measurable growth driver." The paper also warns against 'signal overload", where an over-reliance on data leads to chasing micro-metrics rather than macro impact. As one section notes, 'True brand leadership in the AI age will come from using automation to inform action, not dictate it." But as automation deepens, so does the risk of 'context collapse", a term used to describe ads appearing next to inappropriate content, or messaging that completely misreads the cultural moment. Programmatic ads placed next to videos about war, terror, or tragedy are a grim example. 'The machine didn't know better," one agency executive admitted. This is where the consequences become cultural. For Gen Z and younger millennials, tone-deafness isn't just cringe, but a dealbreaker. 'Empathy is a superpower," said one strategist. 'And right now, most brand playbooks feel like they've forgotten how to use it." Some brands are trying to evolve. They're building diverse creative review teams. They're testing tone frameworks and running sentiment analysis pre-launch. But there's no AI tool for common sense. Or timing. Or taste. Equally concerning is the blurring line between transactional experiences and emotional cues. QR codes, shoppable videos and personalized coupon drops have their place, but when the creative layer vanishes, what's left is commerce without character. And that rarely builds long-term memory. AI can tell you who to talk to, when to talk to them and where to reach them. But it can't tell you how to make them care. That still takes emotional intelligence and a little bit of soul. In the age of full-funnel metrics, maybe it's time to ask: What's the one thing your brand will be remembered for: its CPM, or how it made someone feel? Because at the end of the day, reach without resonance is noise. And in advertising, noise doesn't convert. Emotion does.
Mint
22 minutes ago
- Mint
Markets are euphoric, even minor earnings misses can trigger sharp volatility, says DSP MF's Kalpen Parekh
Earnings need to pick up and even a minor disappointment could trigger sharp volatility given that the valuations are still driven by past growth, according to Kalpen Parekh of DSP Mutual Fund. 'As we head into the upcoming earnings season, we believe the easy phase of earnings growth is behind us," said Parekh, managing director and chief executive officer at the company that manages over ₹2 lakh crore in assets. The next leg of earnings must come from top-line growth, according to Parekh. Current revenue growth is a modest 4%, and a meaningful pickup will require a recovery in demand as margin-led growth is fading, he said. Valuations reflect past strong earnings growth, but not the recent slowdown to single-digit gains, Parekh said. 'Markets are euphoric, where even minor earnings disappointments trigger sharp volatility," he said. Still, liquidity remains strong, every 5-10% dip attracts fresh money, SIPs stay steady, and many funds hold cash which is yet to flow in. Read more: Q1 moves: Retails investors bet big on property, cement and auto parts as 'smart money' retreats Meanwhile, promoters and experienced investors are selling in the rally, suggesting they see overvaluation, Parekh said, adding that a surge in initial public offerings (IPOs), rights issues, and qualified institutional placements (QIPs) indicates insiders are cashing out. Edited excerpts: Do you see the ongoing twists and turns in the India–US trade deal negotiations as a source of high market volatility in the near term? The ongoing negotiations and shifting narratives around the India–US trade deal are a vivid reminder that, whether it's tariffs, changing global alliances, or evolving policy frameworks, the landscape will remain volatile. And yes, these twists and turns can, and do, lead to bouts of market volatility in the near term. That said, volatility is not new for investors. And our role is to not chase headlines or every policy move or market swing; instead, it is to focus on resilient, well-managed businesses. We see businesses across sectors investing in innovation, expanding their reach, and building robust supply chains, qualities that help them withstand not just trade-related shocks but a wide range of uncertainties. While the noise of global negotiations may cause short-term jitters, the underlying health of Indian businesses and their ability to adapt give us confidence that well-run businesses will continue to create enduring value. What are your expectations for the upcoming earnings season? As we head into the upcoming earnings season, we believe the easy phase of earnings growth is behind us. In the post-covid period, a powerful combination of robust revenue growth and margin expansion fueled strong profit growth. Much of this margin expansion, however, was driven by aggressive cost rationalization and operational efficiencies levers that may have now run their course. With margins nearing peak levels, the scope for further expansion looks limited. This means the next leg of earnings will need to come from top-line growth. But here too, the picture is muted; revenue growth currently stands at a modest 4%, and a meaningful pickup will require a recovery in demand. The implication is clear: margin-led growth is fading. Demand-led growth must now take the lead. Unlike some global peers, Indian companies don't have infinite pricing power. Sustainable earnings will increasingly rely on volume recovery and demand strength. Do you see the results season as a potential market mover? Quite likely. We expect a mixed set of results, some resilience, some pressure. But the focus will shift from cost-cutting to quality, from margins to demand. And in that shift, quality businesses will stand out more than ever. The buzz is that earnings growth will pick up in the second half of FY26. Do you think that is already priced in the valuations? Valuations have already priced in a strong trend of earnings growth over the past few years. What's not priced in is a slowdown—yet earnings growth has dropped to single digits at the aggregate market level. If you exclude one-offs from a few telecom and cement companies, overall earnings growth is below 10%. Revenue growth has moderated, margins are peaking, and profit growth is slowing. Historically, Nifty companies have delivered 12–13% profit growth over the long term. We're currently a bit below that, yet valuations are at 23–24 times earnings. For 12% growth, fair valuations would typically be around 16–18 times. So, markets are a year or so ahead of what would be considered fair value. This isn't unusual, though. Markets sometimes trade ahead or behind fundamentals. Are the valuations euphoric? When markets turn euphoric and capital floods in, prices often run ahead of fundamentals. That's the phase we're in—where even minor earnings disappointments trigger sharp volatility. Still, liquidity keeps flowing. Every 5–10% dip attracts fresh money. Many funds hold significant cash or bond allocations, with asset allocation funds only 30% invested on average. SIPs continue bringing in ₹25,000 crores monthly, regardless of market conditions. Read more: Financial distributors turn to GIFT City for outbound funds. But few can enter. Meanwhile, promoters and experienced investors are selling into the rally, suggesting they see overvaluation. A surge in IPOs, rights issues, and QIPs indicates insiders are cashing out. At the same time, long-term investors are entering, creating a tug-of-war between profit-booking and accumulation. Despite weak earnings, markets remain stable, climbing higher even. How much do valuations matter across the market caps, especially in a market which is being called expensive? For a genuine long-term investor, the two fundamental principles are clear: focus on the quality of the company and the price you pay. These two factors—business quality and valuation—are what truly matter over the medium to long term. In the short term, markets can ignore both. In bull markets especially, valuations are often overlooked. But in my 30 years of investing, every time I've ignored valuations, initial returns came—but long-term gains were lower, as prices eventually revert to fair value. Markets don't stay expensive forever. Every company has a fair value, and paying above it usually leads to mediocre returns. Conversely, buying below intrinsic value typically delivers superior long-term returns. Is the market looking expensive now? Today, much of the market is expensive—some areas are priced months or even years ahead of fair value. But that doesn't mean you stop investing. If you're a long-term investor, staying invested is key. Just avoid low-quality or overpriced stocks. Returns that once came in a year may now take 18 months or more, so patience and adjusted expectations are important. The past five years delivered unusually high returns. Naturally, periods of lower returns will follow. We're not fully there yet, markets are still performing, with many segments delivering 15–20% returns due to recovery and a low base. Wearing a fund manager's hat, which segments do you see alpha coming from? Our fund managers see alpha coming from select segments where demand revival and structural growth remain strong. There are very few bargains available in the market. We like some of the sectors like private banks and healthcare and some selected opportunities in some other sectors. Large caps offer a better risk-reward profile than richly valued mid- and small-caps. Read more: Brokers push back as Sebi wages war on speculation Currently, the median (price-to-earnings) P/E ratio for mid- and small-cap stocks is 44x, which is very high from its long-term averages. The top 10 stocks seem relatively better placed in terms of return on equity (ROE) and valuations. Ultimately, alpha will be driven by quality businesses with durable moats and genuine growth drivers, rather than cyclical or overvalued segments. How effective are gold and silver as assets for portfolio diversification? Do you anticipate their allocation increasing and regaining attention among investors? Gold and silver should be part of your portfolio—not just because there's a war today, which could end tomorrow, but also due to exit and tax considerations. They're especially relevant for investors in emerging markets. Over the last 30 years, gold outperformed equities in 24 out of 25 emerging markets. India was the only exception, and even that margin has reversed. Gold typically shows low or even negative correlation to equity indices like the Nifty. While gold's long-term return is ~11% and Nifty's is ~13%, a 50-50 mix has delivered close to 13%—with 40% lower volatility due to opposing correlations. Gold isn't for cash flow but serves as a hedge—preserving returns and reducing volatility. Equities should form the larger part of your portfolio, as they generate cash flow. Still, during long periods when stocks deliver zero or negative returns, gold has historically performed well. A key long-term reason to own gold is currency debasement. Central banks have printed increasing amounts of debt in the last 10–15 years, weakening currencies. Since gold is finite and can't be created at will, it holds its value and acts as a safeguard. What about oil? Large money managers like us can't move money in and out very quickly. So what we often say is that, in some of our funds, we hold XLE—an index of global energy companies like Exxon, British Petroleum, or Chevron. If oil prices temporarily spike, these are the companies that tend to benefit through improved profitability, and we gain exposure by owning their shares through this global index. That's one way to participate in oil or hedge against sharp oil price movements. Alternatively, one can also own a couple of energy companies in India. That's generally the most practical way to get oil exposure. However, the challenge with investing in oil, or in companies involved in oil and other commodities, is that they typically don't generate strong return ratios over the long term. Their ROE often doesn't even exceed their cost of capital. Read more: Tesla Model Y arrives: ₹60 lakh, 500 km range. Charge ahead or run on empty in India? Additionally, oil price volatility is something these companies can't forecast—let alone investors like us. And if you can't forecast the price, it's difficult to value the business properly. So, we tend to invest in such companies only when they're in a very low cycle, when prices are depressed, and downside risk is limited. Then, any price rise can provide a useful hedge. We also discussed debt—are fixed income investments regaining popularity among investors? By the time investors start talking about an asset class, the best returns have usually already come. Currently, interest rates in India are around 7–8%, so bond returns are in that range. But over the last two years, well-managed bond funds have delivered 10–12%. The ideal time to invest was when no one was interested—two years ago. With rates trending down and the RBI cutting, bonds remain important—especially if you're cautious about equities or want to reduce portfolio volatility. As a conservative investor, I typically maintain a 65–35 split. When valuations are high, I shift 20–25% into bonds and 10–15% into gold. Interest rates have been stable and may continue to trend lower, though they're hard to forecast beyond 3–6 months. That said, India's fiscal position, currency, and inflation are all in reasonably good shape.
