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Time of India
07-08-2025
- Business
- Time of India
Valuation correction creating stock-specific opportunities, not sectoral bets: Ashwini Agarwal
"I don't think I can identify broad sectors at this point, but I can identify individual stocks. Outside of the financial sector, maybe domestic healthcare looks okay. Some other domestic consumption names also seem fine. There's a smattering of opportunities from a sector perspective, but on a bottom-up basis, there are quite a few attractive picks," says Ashwini Agarwal , Founder, Demeter Advisors . Other than the sectors you've just mentioned—NBFCs, MFIs, and select consumption plays—given the kind of consolidation we've seen in the markets recently and the rather rangebound movement, are there any sectors that you think look attractive right now in terms of valuations, having seen some correction? Or fundamentally, are there any other sectors or pockets that could, given the current volatility, act as a sort of safety net for investors? Ashwini Agarwal: My sense is that this is not the time to be sector-oriented. It's a time to take a very bottom-up, individual stock approach. Again, in the short run, it's important to temper return expectations—but keep your focus on the medium term. Productivity Tool Zero to Hero in Microsoft Excel: Complete Excel guide By Metla Sudha Sekhar View Program Finance Introduction to Technical Analysis & Candlestick Theory By Dinesh Nagpal View Program Finance Financial Literacy i e Lets Crack the Billionaire Code By CA Rahul Gupta View Program Digital Marketing Digital Marketing Masterclass by Neil Patel By Neil Patel View Program Finance Technical Analysis Demystified- A Complete Guide to Trading By Kunal Patel View Program Productivity Tool Excel Essentials to Expert: Your Complete Guide By Study at home View Program Artificial Intelligence AI For Business Professionals Batch 2 By Ansh Mehra View Program For example, take textile exports . Obviously, they'll get hit if these tariffs are imposed, especially for companies with a high exposure to the United States in their sales mix. If stock prices react negatively, you might actually get an opportunity to buy them. But you'll have to ride out a couple of bad quarters—that goes without saying. So, I don't think I can identify broad sectors at this point, but I can identify individual stocks. Outside of the financial sector, maybe domestic healthcare looks okay. Some other domestic consumption names also seem fine. There's a smattering of opportunities from a sector perspective, but on a bottom-up basis, there are quite a few attractive picks. Live Events You've shared your views on the pharma space , but another sector that could be in focus is electronics, which—for now—has seen some exemptions. A specific example is Apple, which has a manufacturing base in India. Trump has been demanding a shift, and just yesterday, they committed to a large investment in the US. With this whole tariff uncertainty, along with pharma, do you think the manufacturing and EMS ( Electronics Manufacturing Services ) story in India could come under question? Could this be a concern for investors? Ashwini Agarwal: I really can't say for sure because it's unclear whether the tariffs are here to stay, or if this is simply part of ongoing negotiations between the United States and India. We don't yet know how the dust will settle. That said, in the long run, we have to look beyond the immediate term. India's cost advantage in manufacturing is real and here to stay. If our policy framework continues to support it, then eventually, water will find its own level—and global manufacturers will seek a cost-competitive production base. That fact doesn't change. So, if this current noise gives us an opportunity to buy EMS companies at better prices, that would be a welcome development. Frankly, I've found EMS companies to be quite expensive so far. I tend to have a value bias, so I haven't really explored that space much yet. But yes, if stock prices weaken due to this noise, it could present an opportunity. In the long term, India's competitive advantage will remain intact. Apart from Trump's commentary, what's on your watchlist right now? Not just earnings, but perhaps the dollar-rupee or other global markets? Ashwini Agarwal: At the moment, I'm really focused on the earnings season. I'm tracking companies that are improving their revenue, margin, and earnings profile both quarter-on-quarter and year-on-year—where the improvement looks sustainable. Those stocks will perform well. One theme worth focusing on is earnings recovery—companies that have gone through a downcycle over the last two to three years, but whose earnings are now starting to bottom out. Those stocks should do very well. That's what I'm searching for. My sense is that in an overall tepid earnings environment, companies delivering 15–20% earnings growth will see significant valuation expansion. That's where my attention is right now.
Time of India
07-08-2025
- Business
- Time of India
Stay invested, look beyond the dip: Ashwini Agarwal's advice as markets face headwinds
"In the short term, we're also facing challenges because the earnings season has been quite weak, and there's a massive supply of paper coming through the IPO market. So we're looking at multiple headwinds affecting the market right now," says Ashwini Agarwal , Founder, Demeter Advisors . I recall when we were speaking in June, you had mentioned that there's no concern in the market from a long-term perspective, but in the short term, we have Trump to deal with — and nowadays, it's almost on a daily basis. So, what should Indian investors be picking up from all this news flow right now? Ashwini Agarwal: As your previous guest was saying, the right thing to do at this point is to take a longer-term view and ignore the short-term noise. You mentioned pharmaceutical exports earlier — President Trump has said he would impose very high tariffs on pharma products because he wants pharmaceutical companies to invest and manufacture in the United States. But one has to remember that even if companies started investing today, it would take at least three to four years before any production could begin — and by then, the current president's term would be over. Productivity Tool Zero to Hero in Microsoft Excel: Complete Excel guide By Metla Sudha Sekhar View Program Finance Introduction to Technical Analysis & Candlestick Theory By Dinesh Nagpal View Program Finance Financial Literacy i e Lets Crack the Billionaire Code By CA Rahul Gupta View Program Digital Marketing Digital Marketing Masterclass by Neil Patel By Neil Patel View Program Finance Technical Analysis Demystified- A Complete Guide to Trading By Kunal Patel View Program Productivity Tool Excel Essentials to Expert: Your Complete Guide By Study at home View Program Artificial Intelligence AI For Business Professionals Batch 2 By Ansh Mehra View Program by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Top 15 Most Beautiful Women in the World Undo So, while tariffs are one thing, the economic decisions companies make are long-term in nature. Companies will have to think ahead and ask themselves the tough question — does it make sense to manufacture low-cost generics in the U.S. given the cost structure there? To me, the answer is quite clear: you have to muddle through this market. You have to take some pain in the short term and hope that things will become more rational in the long run. That's the only viable path. In the short term, we're also facing challenges because the earnings season has been quite weak, and there's a massive supply of paper coming through the IPO market. So we're looking at multiple headwinds affecting the market right now. Live Events But what does that mean for investors? Are we staring at more difficult days ahead? July has already seen a bit of a rough patch, FIIs have been on a selling spree. Could it get worse before it gets better, or do you think we'll remain range-bound now, especially given the intensity of short positions — it seems pretty acute and perhaps near a bottom? Ashwini Agarwal: In the short run, I believe the downside is somewhat limited — maybe 2–3%, 4% from here — that's my personal opinion. Of course, I could be completely wrong because the short term is honestly impossible to predict with any real accuracy. In the medium term, however, I'm hopeful that the lower interest rates and easier liquidity policies pursued by the RBI over the past three to six months will begin to support domestic demand. Of course, there will be some trade-offs — if the proposed tariffs on exports to the U.S. remain high, there could be headwinds from that front. Overall though, I'm hoping for stronger domestic demand during the festival season, and that could support the market. But if, for any reason, domestic demand continues to stay subdued — despite all the liquidity in the system and all the push from the government through capex and PSU investments — then all bets are off. We could see the market test lower levels on a broader basis. That said, my advice to investors would be: A) Take a long-term view. The downside from here seems fairly limited, assuming liquidity and interest rates do their job in supporting demand. B) Look for bottom-up opportunities. There are many stocks that are down 40–50% from their September 2024 peaks, and valuations in these cases are no longer challenging. If one can look out two to three years, several of these stocks present very interesting investment opportunities . So that's one area stock investors should consider. Otherwise, I'd say — just stay invested and ride it out. There's nothing much to be done right now. That's quite interesting. Could you be more specific — which sectors or pockets do you see these bottom-up opportunities in? Ashwini Agarwal: One clear area is non-banking financial services , especially MFIs. If you look at the commentary from many MFIs, they're all indicating that incremental NPAs are largely under control or not increasing. What we're seeing wash through the system now are the NPAs that have already been identified — and those are being provided for. Maybe there's another quarter of pain left. Several of these companies have been recapitalized, and many continue to trade at or below book value. At their peak, some of them were trading at 3–4 times price-to-book. Now, I wouldn't say that 3–4x was rational, but 1.5x — or even 1.2x in some situations — isn't unreasonable. If you can buy these stocks below book value and hold them over a year and a half, you could make returns of 30–40%, which is quite attractive. That's just one example. There are similar opportunities in domestic consumer plays, in financial services, and across different industries. Of course, there's some risk involved, and you have to think medium term, but there are definitely opportunities out there.
Time of India
25-06-2025
- Business
- Time of India
Geopolitical risks remain, but domestic fundamentals offer insulation: Ashwini Agarwal
"Hopefully, a capex-led recovery that is what we are all hoping to see. So, there is nothing to complain about. Hopefully, the Middle East disturbance also simmers down. We will see how that unfolds because it seems, we have to take each day as it comes. But in the domestic context, barring the valuations which are quite stretched, not much to complain about," says Ashwini Agarwal , Demeter Advisors. With the markets at an all-time high, there should have been like a garmahat in your good morning. Ashwini Agarwal: No, I think markets are nothing to complain about. I mean, valuations are what they are, but flows and the expectations from growth perspective that lower interest rates and government expenditure should lift growth as the year rolls around, those are positives for the market. And like your colleague was pointing out earlier, KEC received some orders, another railway company received orders, I think that is the nature of the beast we are dealing with. Hopefully, a capex-led recovery that is what we are all hoping to see. So, there is nothing to complain about. Hopefully, the Middle East disturbance also simmers down. We will see how that unfolds because it seems, we have to take each day as it comes. But in the domestic context, barring the valuations which are quite stretched, not much to complain about. Live Events While we may talk about valuations which all of us are talking about it, but it is a two-year-old story that valuations mehnge hai, yet markets it keeps on going higher. Ashwini Agarwal: See, we are in a closed box environment. I mean, bulk of Indian savings cannot leave India. What has been established beyond doubt to the retail investor over the last 20-25 years is that equities give you better return than bank deposits both on a pre-tax basis and even more on a post-tax basis. So, shift of savings from bank deposits to equities is a continuing trend. Recent RBI data is also pointing to a shift in that direction. And this is very similar to what has happened in the US, for example, when the 401K shift happened sometime in the 80s and 90s. So, that is what is driving up the market. I mean, if we were a capital open economy and if the investors had the freedom to invest anywhere in the world, I do not think the valuations would be as rich as they are, but this is how it is and you have to take it as is. For markets to go higher from here, we need a trigger and we need a surprise. What could be that positive surprise? Could it be earnings? Could it be anything else? Ashwini Agarwal: So, there is a lot of scepticism around growth and while the RBI has done a reasonable amount of heavy lifting by cutting the CRR and reducing rates and the government continues to push ahead with investments in railways and infrastructure and what have you, the private sector has not responded and that is the positive surprise that can happen since you are asking me for a positive surprise. I am not sure whether it will happen or not. I am hoping. So, I use the word hope which does not have a lot of certainty behind it. But that would be a real surprise and then you could potentially get into a situation where your earnings trajectory improves from 10% to 12% for Nifty , for example, for fiscal 26 that everybody is talking about to maybe 15-17% for the next three years. Now, if that happens, then valuations can remain expensive for longer because then everybody starts focusing on growth, saying that well, India is growing much faster than anywhere else in the world, there are no major macroeconomic imbalances just yet, so let the party carry on. I mean, that is the narrative that can evolve if you were to look for a positive surprise. So, financialization of saving is driving the Indian markets higher, that is your take, but how should one take advantage of that in terms of the stock picking because, of late, we have seen all these AMCs, rather some of these brokerage companies on the stock price movement, they have been doing well. But do you believe at this price point the valuations are fairly placed or what is your take how can one take benefit out of this? Ashwini Agarwal: The capital market plays are already reasonably well priced. Now, of course, they will give you that 12-15% return which is in line with the growth in aggregate market returns because their business will grow by at least that much if not more. But what I would rather do is look for beneficiaries of a low-interest rate regime. The NBFC stand out in particular because their lending costs are somewhat sticky whereas their borrowing costs are likely to fall. I mean, just this morning I was reading a newspaper article which spoke about the rush into low-grade bonds or triple B bonds or A minus type of bonds with investors looking for yields. Now, if that starts to happen, then you can see an improvement in the spreads for the NBFC, so that is one area that I would look at. And in a similar vein, I would look at some of the smaller banks. Now banks have a kind of a dual-edged sword in the sense that their asset book gets repriced faster than their liabilities book in the short run. But I think improvement in net interest income will come from a lower CRR and it will also come from a better loan growth. So, improvement in net interest income come will come from these two factors, from loan growth as well as from lower CRR, so that to me is something that can hold some surprise. And valuations in this space whether it is banks and NBFCs are still quite reasonable, so this looks to be an area where things are looking good to me and that is how one can play it, at least the liquidity part of it from an equities' perspective. Banking and financials, they have been the flavour of the season of late, other than this if you adopt a bottom-up approach, what else is looking attractive? Ashwini Agarwal: The healthcare sector continues to look quite attractive. This is one long-term story that is evolving in India. Healthcare costs are rising. So, whether it is health insurance or whether it is hospitals or healthcare service providers like diagnostics, etc, these will continue to grow at a reasonable rate. Now, in some cases valuations are expensive, in other cases they are not. So, on a bottom-up basis this is an area where one can hunt for some ideas. There are select opportunities in manufacturing as well in various areas whether it is related to exports or whether it is related to domestic economy, I think defence, railways are quite pricey but some of the core engineering companies are still looking alright. There are domestic services plays outside of financial services where one can look at. Now, I have to say that across the board valuations are challenging. So, it is not that there are any screaming buys out there, but relative to growth, you might find a few ideas here and there, but it is becoming more and more difficult to find very appealing bottom-up ideas.
