Latest news with #MarcellusInvestmentManagers
Economic Times
7 days ago
- Business
- Economic Times
Get ready for a narrower market over next 2-4 years where earnings surprises will drive share prices: Rakshit Ranjan
Rakshit Ranjan of Marcellus Investment Managers points out a significant slowdown in Nifty 50's earnings growth, dropping from a 24% CAGR to mid-to-high single digits. Coupled with valuations nearing cyclical highs at 21-22 times FY26 price to earnings, this creates market uncertainty. The focus should shift towards bottom-up stock picking, where earnings surprises will be key drivers. ADVERTISEMENT Yesterday's market flip-flopped between red and green and there's a similar sentiment among investors because there is not much action in the market. It has remained in a range- bound mode for the past month or so. What is your sense? What will drive the markets now? Even the earnings which have come so far have not been the way it used to be, at least in the last quarter. In fact, a dip is there in the earnings which have been disclosed so far. Rakshit Ranjan: Let me add to the context. In terms of earnings growth momentum, not just from last quarter to this quarter but if you look at Nifty 50's earnings from FY21 to FY24, it was as high as 24% annualised CAGR for three long years. From there, in the last five or four quarters plus the one ongoing, we have had a mid to higher single-digit earnings growth. So, it is a massive moderation from mid-20s to mid to high single-digit earnings growth for the market as a whole. The second piece which is also a bit of a challenge for the broader market is when you look at valuations, at about 21-22 times FY26 price to earnings, Nifty 50's PE multiple is nearing a cyclical high. So, there is a combination of moderating earnings at a time when valuations are at cyclical highs and which is why, there is uncertainty in terms of where the markets will go. Our thinking in that regard is that this is the kind of a stock market which is ripe for bottom-up stock picking rather than breadth of the market or width of the market, helping investors make money. In that regard, you will see a far narrower market going forward over the next two, three, four years where earnings surprises – whether or not with or without elevated valuations but earnings surprises – will drive share prices more than just overall every company in that sector doing well like the market we used to have till a year ago. CCP's current portfolio has delivered EPS growth of 14% in FY25 compared to 6% for Nifty 50. Can you enlighten us on the same and explain how to see Marcellus' Consistent Compounder Portfolio (CCP) position amidst the various risks in the markets currently? Rakshit Ranjan: In CCP, we are very conscious of the risk of broader moderation in earnings growth for the stock market. We are very consciously choosing stocks bottom up where the return on capital employed to begin with should not be backed by tailwinds of macro. They should be backed by competitive advantages of companies because macro tailwinds are fading away. Hence there is a lot more competitive advantage-oriented return on capital employed and then a very high rate of reinvestment of that cash to drive growth. There are a couple of themes that are part of the portfolio. For instance, in terms of sectoral themes that become an outcome of the bottom-up stock picking, healthcare is a very big area where our allocations have increased in the last one, one-and-a-half years in the Marcellus CCP. This includes hospitals, diagnostics, even health insurance which is a little bit of a BFSI play. But on healthcare and some pharma companies which are not just formulations doing generic generics or branded generics, but a lot of IP-based competitive advantages in the pharma space. So that is one piece where the lack of macro tailwinds is not a big concern. Hence it is a greater part of the portfolio. ADVERTISEMENT Otherwise, in the traditional sectors like retail, consumption and financials, we are picking up companies which are likely to gain share either because they are evolved supply side business models or demand side business models. Let me take a simple example in consumption. Rather than the traditional modern trade being the primary source of supply side, you have either got large format retail or the quick commerce and e-commerce players doing well and hence orienting growth drivers towards the evolving supply side and demand side of some of the traditional sectors is the second big area where we are constructing the portfolio. ADVERTISEMENT You mentioned quick commerce and yesterday, Eternal was in focus. For over two days, the stock has been on fire, going up around 10% on Tuesday. I want to understand this space. How do you see this space faring in the context of the consumption theme. There are a lot of fintech players in this space. Do you think that competition will also weigh in? Rakshit Ranjan: Oh yes, a lot of capital is chasing this space and as a result, you have to be patient if you want to make money out of prospective winners in this space. Having said that, the proof of the pudding is here. We can see sustainable disruption of the traditional channels and quick commerce, e-commerce are not just fly-by-night disruptions that have come in and will go away. I think they will sustain. So, when you combine the two together, we have businesses such as the one that you mentioned where profitability is very volatile given that it is in a high investment stage, in early stages of scaling up. But if you have got clarity of thought on which will turn out to be the winners amongst all the options in such a space, there are a lot of returns for investors to be had. We have not got exposure specifically to the stock that you mentioned but we have got exposure via a job postings company which is also investing in quick commerce companies like the one that you just mentioned. So yes, we are exposed here. ADVERTISEMENT When do we expect the FIIs to come back because they have been extending the selling spree and a few sessions where we do see buying, the buying levels are also of very short quantum. DIIs are trying to support the markets, but the exposure of FIIs more so is in the banks and financials and IT. I agree the IT results were not that great and we still have a lot of results in largecap or midcap IT plays to come out, but are the banks and financials doing good? Rakshit Ranjan: Yes. First of all, I am not an expert on FII, DII flows and there are so many moving parts here that every month, the answer to your question on broader FII, DII flows will be changing. Every month there are different factors at play which keep moving up and down. In terms of the sectors that you mentioned where FIIs have historically oriented themselves and the outlook of those, you are right IT services certainly is undergoing a very uncertain period in the interim but once the transition towards how AI applications and the entire GCC versus IT services balance are through and a few other factors that are playing out in interim for IT services, settles down, this sector will continue to see to see growth. The banking sector, on the other hand, has completely evolved in the last 12 months. Till a year ago, pretty much all banks were reporting healthy deposit growth, credit growth, healthy net interest margins, NPA, all sorts of parameters were pretty healthy for the broader industry. In the last six to nine months, we have seen a separation between the boys and the men in this space where we have not seen a massive NPA spike across the system, but the gap in NPA progression of higher quality lenders versus the rest, has widened a bit. Deposit growth has widened a bit and with interest rates falling, net interest margins will be another differentiating factor. ADVERTISEMENT Some companies will be able to manage the pressure on NIMs better than others and that is where you will see the gap opening up. So, men versus boys separation is underway and whether or not that links into FII flows pumping into the high-quality lenders, we will have to wait and watch. (You can now subscribe to our ETMarkets WhatsApp channel)
Economic Times
20-07-2025
- Business
- Economic Times
Salaried job vs business mindset: How British rule manipulated India's entrepreneurial potential, explains Saurabh Mukherjea
Generations Were Pushed Into Salaried Roles by Colonial Bias Against Indian Businessmen. (Representative Image) India's deep-rooted shift from a nation of business owners to one dominated by salaried employees did not happen by chance. According to founder and chief investment officer of Marcellus Investment Managers Saurabh Mukherjea, this transformation was a result of deliberate colonial manipulation that systematically dismantled the country's entrepreneurial ecosystem. Drawing on historical research and economic insights, Mukherjea explains how British rule disrupted India's flourishing business culture and replaced it with a mindset centered around job security and government service. In a video clip shared on his LinkedIn, Mukherjea, citing the book India Before the Ambanis by historian Lakshmi Subramanian, highlighted that during the Mughal era—spanning the 16th to 18th centuries— Indian entrepreneurship was thriving. The subcontinent enjoyed flourishing commerce that extended beyond domestic markets to the Middle East and Southeast Asia. He pointed out that several wealthy Indian merchants and financiers, such as Virji Vora, Shantidas Jhaveri, and Jagat Seth, operated at a scale comparable to today's unicorn founders. These business leaders were not just traders but multi-sectoral giants who worked in areas like shipping, textiles, and money lending. Their success symbolized a deeply rooted entrepreneurial ecosystem that thrived under the Mughal this momentum was disrupted as British colonial influence grew stronger in the 19th century. According to Mukherjea, the British began systematically displacing Indian entrepreneurs through discriminatory regulations and social engineering. He referred again to Subramanian's book, which documents instances where Indian business communities such as the Parsis in Bombay and families like the Tagores in Bengal were deliberately explained that the British also ran a long-standing campaign to shape public opinion against Indian businessmen. Over time, they associated Indian entrepreneurial groups—particularly Gujaratis, Marwaris, Sindhis, and Parsis—with negative stereotypes. By painting them as cunning or untrustworthy, the British were able to diminish their social stature and curtail their influence in India's independence in 1947 marked the end of British rule, Mukherjea argued that the colonial mindset persisted through the newly empowered bureaucracy. The civil service, inherited from the British Indian administration, continued to hold a skeptical view of private enterprise. This bureaucratic suspicion delayed India's return to its business roots and suppressed entrepreneurial initiatives for stated that it wasn't until the 1991 economic reforms led by then-Finance Minister Dr. Manmohan Singh and Prime Minister P.V. Narasimha Rao that the tide began to turn. Liberalization policies encouraged private enterprise and slowly helped India shed the lingering effects of colonial economic on the present, Mukherjea noted a sharp resurgence in Indian entrepreneurship. The number of companies being registered in India has tripled over the past decade, signaling a renewed embrace of business creation. However, he emphasized that this revival is not just about policy change but also about challenging the deep-rooted narrative that once pushed generations into salaried jobs instead of entrepreneurship.
Time of India
20-07-2025
- Business
- Time of India
Salaried job vs business mindset: How British rule manipulated India's entrepreneurial potential, explains Saurabh Mukherjea
India's deep-rooted shift from a nation of business owners to one dominated by salaried employees did not happen by chance. According to founder and chief investment officer of Marcellus Investment Managers Saurabh Mukherjea, this transformation was a result of deliberate colonial manipulation that systematically dismantled the country's entrepreneurial ecosystem. Drawing on historical research and economic insights, Mukherjea explains how British rule disrupted India's flourishing business culture and replaced it with a mindset centered around job security and government service. In a video clip shared on his LinkedIn, Mukherjea, citing the book India Before the Ambanis by historian Lakshmi Subramanian, highlighted that during the Mughal era—spanning the 16th to 18th centuries— Indian entrepreneurship was thriving. The subcontinent enjoyed flourishing commerce that extended beyond domestic markets to the Middle East and Southeast Asia. Explore courses from Top Institutes in Select a Course Category Cybersecurity Project Management Data Science Finance PGDM others Others Artificial Intelligence Technology Management Product Management Leadership Data Analytics Public Policy Healthcare Operations Management healthcare MBA Degree Data Science Digital Marketing Design Thinking MCA CXO Skills you'll gain: Duration: 10 Months MIT xPRO CERT-MIT xPRO PGC in Cybersecurity Starts on undefined Get Details He pointed out that several wealthy Indian merchants and financiers, such as Virji Vora, Shantidas Jhaveri, and Jagat Seth, operated at a scale comparable to today's unicorn founders. These business leaders were not just traders but multi-sectoral giants who worked in areas like shipping, textiles, and money lending. Their success symbolized a deeply rooted entrepreneurial ecosystem that thrived under the Mughal administration. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Victoria Principal Is Almost 75, See Her Now Reportingly Undo British Colonial Strategy: Undermining Indian Business However, this momentum was disrupted as British colonial influence grew stronger in the 19th century. According to Mukherjea, the British began systematically displacing Indian entrepreneurs through discriminatory regulations and social engineering. He referred again to Subramanian's book, which documents instances where Indian business communities such as the Parsis in Bombay and families like the Tagores in Bengal were deliberately sidelined. Mukherjea explained that the British also ran a long-standing campaign to shape public opinion against Indian businessmen. Over time, they associated Indian entrepreneurial groups—particularly Gujaratis, Marwaris, Sindhis, and Parsis—with negative stereotypes. By painting them as cunning or untrustworthy, the British were able to diminish their social stature and curtail their influence in commerce. Post-Independence Continuity of Colonial Bias While India's independence in 1947 marked the end of British rule, Mukherjea argued that the colonial mindset persisted through the newly empowered bureaucracy. The civil service, inherited from the British Indian administration, continued to hold a skeptical view of private enterprise. This bureaucratic suspicion delayed India's return to its business roots and suppressed entrepreneurial initiatives for decades. Mukherjea stated that it wasn't until the 1991 economic reforms led by then-Finance Minister Dr. Manmohan Singh and Prime Minister P.V. Narasimha Rao that the tide began to turn. Liberalization policies encouraged private enterprise and slowly helped India shed the lingering effects of colonial economic suppression. Reflecting on the present, Mukherjea noted a sharp resurgence in Indian entrepreneurship. The number of companies being registered in India has tripled over the past decade, signaling a renewed embrace of business creation. However, he emphasized that this revival is not just about policy change but also about challenging the deep-rooted narrative that once pushed generations into salaried jobs instead of entrepreneurship.
Mint
19-07-2025
- Business
- Mint
India's rich don't seem to be saving enough. Here's why it makes perfect sense.
The recent Dun & Bradstreet India survey, conducted with Marcellus Investment Managers, has sparked considerable debate in wealth management circles. The numbers are striking: 43% of India's high-net-worth individuals (HNIs) save less than 20% of their post-tax income, and a significant portion don't have sufficient emergency cash. For those not familiar with HNI finances, these findings may appear counterintuitive—even troubling—given their wealth. But having worked closely with affluent families for years, I believe the data reflects a more nuanced reality than simple financial imprudence. Beyond traditional saving metrics To understand why HNIs appear to be 'under-saving", we must redefine what savings mean in the context of substantial wealth. Traditional saving advice, built around salaried individuals, is inadequate when applied to those with complex financial ecosystems. The definition of HNIs used in the many surveys and reports may differ from that used by wealth managers or multi-family offices. What sets HNIs apart Traditional personal finance frameworks—designed around salaried individuals—do not apply when portfolios spanoperating businesses, real estate, private equity, and public markets. HNIs operate in a fundamentally different financial landscape. Unlike traditional savers, who prioritise cash accumulation, HNIs focus on deploying capital efficiently. Every rupee sitting idle represents an opportunity cost, particularly given their sophisticated understanding of risk-adjusted returns. Another reason why traditional metrics under-represent HNI savings is that much of their wealth is held outside personal balance sheets, embedded in trusts, holding companies, limited liability partnerships (LLPs), and offshore entities. These structures are designed not just for tax efficiency but for succession planning, regulatory clarity, and investment agility. As a result, what may appear as low personal liquidity or savings is often capital strategically parked within investment vehicles that allow faster, tax-optimised decision-making. Wealth in these structures can be invested in private deals, real estate special purpose vehicles (SPVs), or pooled vehicles, offering both insulation and strategic advantage. Conventional savings thus take a backseat to more dynamic wealth management strategies. The strategic use of debt Perhaps the most misunderstood aspect of HNI financial behaviour is their relationship with debt. While most retail investors see debt as a financial liability but for the wealthy, debt is a strategic asset—used to amplify returns, manage liquidity, and unlock tax efficiency. Consider a successful entrepreneur operating in the highest tax brackets. For such individuals, interest-bearing debt can provide immediate tax benefits while preserving capital for higher-yielding opportunities. When their business generates substantial returns, or when private market investments offer superior risk-adjusted returns, servicing debt at prevailing market rates becomes a calculated arbitrage play. This leveraging strategy extends beyond simple tax optimisation. HNIs frequently use debt to maintain liquidity without disturbing their core investment positions. Rather than liquidating appreciating assets to meet cash requirements, they borrow against these holdings, preserving long-term wealth creation while addressing immediate needs. The idea is simple: borrow against appreciating assets while they continue compounding. What matters most is how this debt is structured and secured. HNIs typically take on debt against appreciating assets—real estate, securities or business equity—rather than unsecured consumer debt. This secured positioning, combined with multiple income streams, fundamentally alters the risk profile. Cash flow complexity and emergency fund realities Instead of traditional emergency funds, HNIs typically maintain emergency liquidity through credit facilities, securities-backed lines of credit, or quick-liquidation investment positions. These structures provide immediate access to substantial capital without the opportunity cost of holding large cash balances. The portfolio integration approach Debt is just another asset class, one that generates tax benefits and frees capital for higher-return opportunities. The optimisation occurs at the portfolio level, where the combined performance of assets, liabilities, and tax strategies creates superior risk-adjusted outcomes. For instance, an HNI might maintain a mortgage on their primary residence despite having enough cash to pay it off. The mortgage interest provides tax deductions, while the preserved capital is invested in appreciating assets or growth businesses, generating significantly higher returns. The net effect often exceeds what traditional debt reduction can achieve. Risk management in complexity HNIs must maintain full visibility into their financial ecosystem, understanding how various components interact during different market conditions. The real risk isn't leverage—it's misaligned liquidity. While leverage can enhance returns, mismatched liquidity profiles can force selling during market downturns. Successful HNIs maintain diversified liquidity sources and avoid concentration risks. This requires continuous monitoring and periodic rebalancing. HNI financial strategies must therefore remain adaptable while maintaining structural integrity. The path forward The D&B survey findings highlight important considerations for HNI wealth management. The key lies in distinguishing between strategic leverage and excessive risk-taking. The focus in this case should shift from traditional saving metrics to comprehensive wealth optimisation. Rahul Bhutoria is director and co-founder, Valtrust.
CNBC
03-07-2025
- Business
- CNBC
CNBC's Inside India newsletter: Peaked, paused, and poised? India's market reboot at half-time
Six months ago, the 2025 outlook for Indian equities looked far from rosy. India's stock market was entering the year from a correction, and my conversations with market watchers were bleak, with many predicting a slowdown in earnings and lofty valuation multiples. As we stand at the halfway mark of the year, it is safe to say that Indian equities have had a tumultuous six months marked by a bull run following U.S. President Donald Trump's wide-ranging tariff hikes, a sharp sell-off, and signs of a recovery. Still, the MSCI India Index — which captures the performance of 157 large- and mid-cap stocks — has risen just 5.68% so far, nearly seven percentage points less than the MSCI Asia Pacific Index. Meanwhile, the 50-stock Nifty 50 benchmark has added 8% so far this year, underperforming the 19.6% gains in Hong Kong's Hang Seng Index and the 29.4% surge in South Korea's Kospi index. My conversations on what was not too long ago one of the world's top-performing stock markets, have transitioned from euphoria to cautious optimism in the short term. "Indian markets peaked last September and then corrected all the way till February before bouncing back to peak levels now. However, quarter-on-quarter earnings have continued to slow, so we're back to square one," Pramod Gubbi, co-founder of Marcellus Investment Managers, told me. Lower earnings aside, experts have also raised concerns over India's ability to withstand competition from regional peers, which boast cheaper multiples while also having favorable demographics that support consumption growth. A strong contender is Hong Kong, which has seen a surge in listings and is reportedly attracting renewed interest from global funds. Vivek Subramanyam, founder and CEO of investment bank and asset manager TH Global Capital, estimates that the Nifty 50 is trading at a 60% premium to the Hang Seng Index and a 70% premium to its emerging market peers in Asia. "Regions like Taiwan and emerging Asia ex-China, with stronger growth prospects, could potentially outperform India," he said. Still, Subramanyam expects Indian companies' earnings per share in 2026 to grow at around 15% or 17% higher than that of its peers in emerging Asia and double that of those on the Hang Seng index. He expects Indian markets to "produce another single-digit gain" of up to 9% to 10% in the next six months. A trade deal between the U.S. and India — which is expected very soon — would allow for growth to come in at the higher end of the range as it would indicate a reduction in India's protectionist policies, Subramanyam explained. "India's valuations are certainly elevated compared to other emerging markets, and the short-term upside is limited. But I think the recent slowdown and ongoing recovery in growth make now a good time to selectively buy Indian equities in the medium to long-term," he added. As investors take bets on India, Subramanyam cautioned on the need to be careful when picking stocks. Subramanyam is looking out for companies with superior returns and what he calls "recurring revenues," which are predictable and sustainable over a 5-year period. One such company is Home First Finance Company India, which offers home loans catering to India's low and middle-income strata. "People are always going to need home loans. So, there is an inherent revenue stream for the company, which I think can compound in the next few years, given India's growing young population," Subramanyam explained. Marcellus' Gubbi is similarly looking at companies with strong balance sheets and cash, which can easily be deployed for R&D, advertising or even productivity-enhancing initiatives for staff, which can eventually yield better performance and earnings growth. I asked if he has a preference for value over quality stocks, and large- or small-cap names. He said, "I think value and quality have pretty good representation across market cap spectrums. You can't really say that all large cap stocks are quality, small cap is value." Large caps, Gubbi says, are trading at a discount to small caps as the latter have been seeing a "disproportionate amount of fund flows," partly because of investments by retail investors in domestic mutual funds. He has a bottom-up approach to stock selection, which is agnostic to sectors and market capitalization. Gubbi, however, added that flexi cap mutual fund managers are increasingly in favor of large caps over small-cap names when deciding allocations, "partly because valuations are still relatively lower." My takeaway from speaking to Subramanyam, Gubbi and Kevin Carter, founder of EMQQ Global, is consistent: India is a long-term play. Gubbi tells me that "predicting short term stock price moments is not just typical, it is futile to some extent." India, Carter added, is a place where every emerging market investor should have their money in. "India's population is bigger than all the other emerging markets combined, excluding China. So on paper, it is perfect. It's got the biggest population, the best demographics, the fastest growth, and that's driving consumption, so on paper, it's everything you could ever ask for," Carter added. The investor — whose focus is primarily on new age tech companies — says that Indian internet companies offer stronger growth momentum and attractive valuations than their emerging market peers, despite being a tad more expensive. Companies he is betting on include Eternal, the parent company of food delivery platform Zomato, travel platform Le Travenues Technology, also known as Ixigo, and recruitment and matrimony platform Info Edge. These companies are in the early innings of their growth, Carter says, adding that they have huge potential to grow their revenues and profits as Indian consumers become more affluent and spend more over the next decade or two. He foresees that Indian tech names will see a pickup in investor interest in the medium term, as investors look to rotate out of U.S. tech names, such as the so-called Magnificent Seven stocks, amid macroeconomic uncertainties and a weaker dollar. "India has solid digital public infrastructure and the best leaders running tech companies. So it's a perfect place for global investors to invest in, especially for internet companies, which are set to see a compounding in its growth," Carter added. Radhika Rao, senior economist at DBS, said there are positive signs that Indian markets could reach new highs. Rao is also optimistic that India can reach a deal with the U.S., but noted that New Delhi might not lower barriers on its agriculture sector too quickly. Sanjay Mathur, ANZ's chief economist for Southeast Asia and India, said that even if a trade agreement with the U.S. does not pan out, the hit to New Delhi's economy might not be too significant because trade "is a fairly small part" of India's growth.'Sensitive stage' of U.S.-India trade negotiations. India is pushing back against the U.S.' demand to access its domestic market for genetically modified crops, sources told CNBCTV-18. If the talks crumble, 26% tariffs are "imminent," another source said. Eight years of goods and service tax in India. Launched on July 1, 2017, the country's GST has transformed India's economy. CNBCTV-18 breaks down the various ways in which the tax has evolved since its inception and where it's headed in the future. Indian investigators retrieve Air India crash data. Black boxes that contain the cockpit voice recorder and the flight data recorder were recovered in mid-June. Investigators hope the information will provide insight into Air India's fatal crash on June markets were trading in positive territory on Thursday. The benchmark Nifty 50 was up 0.22% while the BSE Sensex index had risen 0.18% as at 12.35 p.m. Indian Standard Time. The benchmark 10-year Indian government bond yield had ticked up marginally to trade at 6.293%.July 4: India FX reserves July 9: Educational consultant Crizac IPO, India M3 money supply July 10: F&B consultant Travel Food Services IPO, U.S. Federal Open Market Committee minutes
