GST 2.0 and infra push could power India's next growth phase: Nilesh Shah
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"You have seen the reaction to gold prices , to crude oil prices . All of this we seem to be getting into kind of an environment of moderate inflation , subdued inflation, that has traditionally always been a challenge or a pain for India. So, clearly, honestly from a sentiment point of view and the emerging macro fundamentals, this is a great situation to be in," says Nilesh Shah , MD & CEO, Envision Capital I do not know about the multibagger ideas, but yes, today's interaction could not have been on a better day that when truce has been announced, ceasefire has been announced. At least it puts to rest any of the kind of geopolitical issues or tensions which probably the market had, got reflected a bit of that yesterday but thankfully today we are back to pretty much like business as usual or back to normal. And it honestly augers very well for the market. It augers well for India.You have seen the reaction to gold prices, to crude oil prices. All of this we seem to be getting into kind of an environment of moderate inflation, subdued inflation, that has traditionally always been a challenge or a pain for India. So, clearly, honestly from a sentiment point of view and the emerging macro fundamentals, this is a great situation to be in.So, yes, from a pure macro and especially external macros, probably a lot of good news is out there. It is more about now what we do in terms of our own internal policy measures, economic reforms, and I am not talking of the big bang reforms, but just a few things could pretty much further not just the sentiment but also further lift up the fundamentals and contribute to earnings growth, I clearly believe something that we really need to look forward to and watch out for in 2025 is clearly going to be the GST 2.0, I mean that is something which has been in the works in terms of enough of reports out there in the media that the government is looking to now take GST to the next level whether it is in terms of cut in tax rates or whether it is in terms of rationalising taxes or reducing tax slabs and ease of implementation, all of that, I clearly believe that that is something which is probably less spoken about, less appreciated but I actually believe that is going to be very-very powerful, so that is one.And two is upping up the spend on infra. I mean, this financial year the spend on infra pack was kind of pretty much at 3% which was in line with what it was last financial year. But there is room for that to kind of go up. I clearly do not think we have seen any peak of spending on infrastructure, till we get to at least 5% to 6% of the GDP which itself is growing. So, I probably believe that in the next few years you will probably see infra spend probably double or maybe even go even higher than that.So, these are some of the things which will continue to be very-very big growth drivers. These are things which will basically encourage businesses to grow and expand. So, on the whole, yes, apart from the global macros, I also believe our own domestic macros, policy measures, there is still lot of room for many things to happen.No, I do not think because ultimately… I mean, this is a space, especially the largecap it has basically just been growing in about single digit. I believe that for a growth market like India where we have so many other growth options, unless you are essentially hugging the benchmark or want just basically the basic kind of largecap market returns, honestly as a bottom-up investor you probably do not have a compelling reason to be in largecap IT.It might be a good place to hide when there is enough correction and these are anyway very capital efficient companies and strong on governance as well. But beyond that, there is really nothing significant to really look out for. So, even in good times they were growing in single digits. If the US economy were to get challenged, global economies were to get challenged, even trying to grow in high single digit could be a huge-huge challenge for the big IT companies.Of course, pockets remain in the midcap, smallcap IT space where they are specialising in specific domains, those kind of opportunities can remain, but otherwise the big IT companies, the best is behind them.Oh, absolutely. I mean, that has clearly been one of the strongest growth bastions that India has in the consumption space. Clearly post covid over the last five years the whole wave of premiumisation has caught on to the alcobev space. Indian companies have been hugely successful in being able to launch brands which essentially have got well received by consumers and Indian alcobev companies are only increasing their relevance to an ever growing consumer base in India. So, I still think it is still early on.We are still very early on in terms of matrices like our per capita consumption and individual players continue to be on the journey of premiumisation which is driving their realisations, revenues, margins, cash flows. So, I still believe that the sector itself, the category itself still has many-many years to go.
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