Latest news with #SaurabhMukherjea
Time of India
4 days ago
- Business
- Time of India
Technology to drive consolidation in broking and asset management: Saurabh Mukherjea
Saurabh Mukherjea , Founder, Marcellus Investment Managers , discusses his views on the AMC space, potential tariffs on India and China, and the impact of technology on broking and asset management. Mukherjea says the Reserve Bank of India's banking regulations favour incumbents. However, broking and asset management are experiencing tech-driven disruption. Zerodha and Groww exemplify this shift. Digitization allows even smaller players to thrive. Technology will drive consolidation in broking and asset management. New AMCs may use fintech to disrupt the space. The key fact for the Indian markets is that domestic liquidity is very strong right now. SIP numbers are once again hitting highs. But one of the sectors that is likely to be beneficiary of this trend rather than which is already in the making, is the AMC space. What is your take on that as we are seeing this liquidity driven movement in select sectors. Can AMCs be a good bet? Saurabh Mukherjea: I would like to say that as a shareholder in my own AMC, I have to be realistic here. Given that some really big boys are entering the AMC space with lots of capital, many billions of dollars, I have a feeling that we are going to see profit margin compression in the years ahead. This is a classic capital cycle playing out where lots of AMCs are coming up and plenty of capital is coming in. So, coming back to our portfolios, we have sold out on our stock market plays, whether it is AMC, wealth management, the infrastructure which is the stock market. So caution is a relevant part of investing and looking at the juicy valuations in that space, we have sold out on the stock market related to the wealth management, asset management related plays in our portfolios. Finance Value and Valuation Masterclass - Batch 4 By CA Himanshu Jain View Program Artificial Intelligence AI For Business Professionals Batch 2 By Ansh Mehra View Program Finance Value and Valuation Masterclass - Batch 3 By CA Himanshu Jain View Program Artificial Intelligence AI For Business Professionals By Vaibhav Sisinity View Program Finance Value and Valuation Masterclass - Batch 2 By CA Himanshu Jain View Program Finance Value and Valuation Masterclass Batch-1 By CA Himanshu Jain View Program by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like War Thunder - Register now for free and play against over 75 Million real Players War Thunder Play Now Undo But last time we interacted, we had just received the first sprint of tariffs on India and now that situation has escalated so much because right now temporarily even though that may be the case, we are still at 50%. What could be the impact on the markets if this number were to continue to be above 25% even after the meeting that we are all watching very closely? Saurabh Mukherjea: My reading is much of this is negotiation and hardballing of India. The critical negotiation here as you are alluding to is the Putin-Trump negotiation. Clearly to my mind, the American president is putting pressure on Russia by punishing India for buying Russian oil. Hopefully, the Putin-Trump negotiation ends up in something fruitful whether it is Ukraine, whether it is some sort of broader deal between Russia and America. Once that piece is off the table, tariffs will come down. A 20% tariff on India and 30% on China will be a decent outcome. It will give India an advantage vis-à-vis China. It will give China plus one theme a fillip. It will allow America to reduce its dependence on China. So, 20% tariff on India and 30% on China seems to be the steady state that we will end up say four-five months out once the Putin-Trump negotiations reach some logical end. What about the new-age tech? I have been chatting with many market experts and everyone is scratching their head to figure out what could be the next banks. Now, it is going to take some time to reach that kind of weightage that banks cherish in share right now, but where can leadership emerge and give banks a stiff competition in years to come? Saurabh Mukherjea: In banking, the RBI does in a way helped the incumbents by blocking new entry. So, AU Finance got the first universal bank license in 10 or 11 years. In 30 years, India has had three new universal banks. But the RBI blocks entry into banking and that in a way makes the job of the incumbents slightly easier. But in broking, in asset management, there is no such blocking of entry and the sweeping up of the broking asset management space on the back of tech disruption of asset management and broking is upon us. Live Events You Might Also Like: Investment strategy: Saurabh Mukherjea on 3 ways to approach consumption basket We have seen the impact of firms like Zerodha, Groww. The digitisation of broking and asset management is reasonably easy to fathom and even small players like us have not built a single branch and yet we have been able to grow the business reasonably smoothly just by focusing on high net worth investors. So, the tech broking, tech asset management space, the use of fintech to drive broking and asset management will be a big theme for the next decade. In any such construct, where technology is being used, the big will get bigger and better and therefore, the smaller players, especially the players who do not have technology, will fall behind. We will see consolidation in broking and asset management driven by technology and it will be very interesting to see that the newer entrants into the AMC space will be able to use fintech to disrupt the space. We have not seen much of this interestingly in America and the broking that we saw Robinhood do in America. In a way, Robinhood's counterpart here would be a Zerodha, but in American asset management, we have not seen tech play a disruptive role in consolidating American asset management. It will be interesting to see whether the new-age Indian AMCs are able to do that. But broking seems relatively clear and I think AMCs will also consolidate on the back of fintech. You Might Also Like: For next 3-4 months, US Fed has runway to cut rates; tariff pass-on to consumers to happen over next 1 year: Taimur Baig
Time of India
4 days ago
- Business
- Time of India
Investment strategy: Saurabh Mukherjea on 3 ways to approach consumption basket
Saurabh Mukherjea , Founder, Marcellus Investment Managers , discusses the current spending habits in India, pointing out that dwindling household savings and less access to credit are putting pressure on urban consumption. He recommended putting money into leading private banks like HDFC and ICICI, the pharma and healthcare sectors (mainly path labs and hospitals), as well as small and midcap companies in Europe and America. For someone who maps India's consumption patterns so closely, what has been your read through because it has not really been an across-the-board move when it comes to consumption. Rural consumption is picking up, but it is still patchy. Two-wheelers are doing good, passenger vehicles are not, but premiumisation continues to rule the roost. Saurabh Mukherjea: In the first couple of years after Covid, we benefited from two different things. One was obviously revenge spending. People saved up in those two years of sitting at home during Covid and when they came out of their houses, from Diwali '21 to Diwali '23, the revenge spending piece played out. But also, what helped consumption in that aftermath of Covid was easy availability of credit. The RBI increased money supply to deal with Covid and that made the system flushed with cash. 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That consumer borrowing piece, especially in urban India, is under pressure as the results of the banks and NBFCs show delinquencies are up, first cheque bounces are going up even in affluent cities like Hyderabad and Bangalore. The IT job creation story is non-existent and even bigger banks are letting go of people. So, the lack of job creation, the depletion of savings are very clear in RBI data. The net household savings are at 50-year lows and that is the driver of urban consumption being under the pump. You are right in saying the rural piece is recovering. The rural piece did not take off as much after Covid and therefore, now that the damage of Covid on rural India has gone. The rural piece seems to be showing signs of life and we are optimistic that a good monsoon will give further fillip to rural consumption. How do you manoeuvre this dwindling consumption pattern right? As an investor, how do you approach the entire basket because it is going to have a multiplier effect? Saurabh Mukherjea: There are three things that we are trying to do and I will quickly highlight them. The first piece is if you want a place to play the highest quality end of Indian consumption, then look at the two best private sector banks – HDFC Bank and ICICI Bank. We have both in various portfolios. Their asset quality is holding up. The liability piece is stronger than ever before. I suspect again that once again the public sector banks are going to fall behind. But it is interesting, that this time barring HDFC and ICICI, the rest of the private sector banks also look to be struggling on both sides of the balance sheet. This is very interesting. Live Events You Might Also Like: We are holding 14-15% in cash in this slightly bearish undertone market: Siddharth Vora On both sides of the balance sheet, we are seeing the private sector banks having a challenge. So, the best of Indian consumption, and in a way, the best of Indian retail has been locked in by these two premier private sector banks. The second piece is, as is always the case in an economic downturn, the pharma, healthcare piece holds up and the good thing about India now is that it is no longer just pharma, hospitals, and diagnostics. Those are good places to be, the rise of medicare, the rise of medical insurance, the government doing Ayushman Bharat has created a big and fast growing private sector hospital, diagnostics ecosystem. There is money to be made by deploying funds there. There are obviously valuation issues, but there are still attractive valued plays there. The third piece is, we are going abroad. We are investing significant sums of our own money and encouraging clients to join us in investing in European and American small and midcap companies which are available at half the valuations prevalent in India and for double the earnings growth. For example, in America, household debt is at 25-year lows and the consumption piece is holding up nicely and valuations there are half of what we are getting here, for double the earnings growth. Considering you so closely look at consumption as the theme, where is it that you are still finding that valuation comfort? Saurabh Mukherjea: The healthcare piece is actually very exciting. We are at the beginning of the healthcare story. Neither the state government nor the central government is adding meaningfully to the hospital beds piece in India and naturally with the population growing at 2%, with growing desire of the middle class to be treated well, we will see the private hospital sector grow leaps and bounds. We have been long-standing shareholders now in Narayana Hrudayalaya; it sits in many of our portfolios. But there are other smaller high-quality hospital chains that we have owned in the past, we might own them in the future. You Might Also Like: Portfolio reshuffling contributing to market volatility? Deven Choksey explains So, Rainbow Healthcare, which focuses on maternity gynaecology, is a well-run company, but there are plenty of plays in hospitals and more and more of these private hospital chains are going to go public. As is well known, every PE company, every PE investor in India is building a hospital platform. Diagnostics has been a long source of wealth creation for our clients; Dr Lal PathLabs for many years has been a big part of our core portfolios. We also believe Vijaya Diagnostic in southern India is doing a good job. Through acquisitions, they have grown in Pune and Kolkata. Southern India is now roughly twice as rich as the rest of India and naturally as in richer parts of the country, the desire for diagnostics and healthcare is greater. So, path labs and hospitals are plenty to play for. Valuations are still in the realms of sanity rather than in the realms of fantasy. You Might Also Like: Avoiding chemicals and cement stocks; new-age consumption stocks long-term bets: Pratik Gupta
Mint
7 days ago
- Business
- Mint
India MF count jumps after long lull on policy change, growth scope
A mix of tax policy shifts, product innovation and untapped potential is redrawing India's asset management map, spurring a rush in the mutual fund industry. Interestingly, not all are fresh entrants, but existing players in the ecosystem—portfolio managers, alternate investment funds (AIFs), stock brokers, and even investment bankers—who are now stepping in. The number of mutual funds that were stagnant for the last five years, saw a sharp rise to 53 as of 9 August. As per data from Securities and Exchange Board of India (Sebi), the number of fund houses were hovering around 45 between FY19 and FY24, and saw a sudden rise to 53 in FY25. Key factors include a change in short-term capital gains tax (STCG) bothering the portfolio management system (PMS) and AIF players, a new product launched by Sebi that gave benefit to mutual funds over PMS and AIFs, and shrinking revenues for brokers. And lastly, a very underpenetrated mutual fund market, which everyone wants to tap. On the PMS side, players like Abakkus Asset Managers, Carnelian Asset Management Advisors, Marcellus Investment Managers, ASK, and others are in the process of getting a mutual fund license, according to Sebi. On the broking side, Choice International Ltd, Estee Advisors Pvt Ltd have been there. Pantomath Capital Advisors Ltd, an investment banking company, also got a mutual find licence. In the FY24 Union Budget, the STCG was increased to 20% from 15%, which reduced the post-tax returns for PMS and AIFs, experts said. Unlike mutual funds, PMS and AIFs pay a tax, called a tax on churn, every time they sell a stock. So, whenever they have to sell a stock and buy another, the investor ends up paying either LTCG or STCG on the gains it made on the stock. 'Since the STCG was jacked up to 20%, PMS schemes are immediately at a disadvantage to mutual funds in terms of taxation. When the tax was low, PMSes could deal with STCG but the tax now increased it creates a performance lag which no PMS wants," said Saurabh Mukherjea, founder and chief investment officer (CIO) at Marcellus Investment Managers, stating this to be one of the reasons why PMS players are getting MF licenses. Marcellus Investment has also got an in-principle nod from Sebi to start a mutual fund. PMS and AIFs have captive customers; distribution network in place and with the added benefit of taxation, mutual fund becomes a natural extension of their business to scale AUM, said Juzer Gabajiwala, director at Ventura. New players are trying to tap into the industry on the back of strong inflows in the space. Assets under management (AUM) for the mutual fund industry reached ₹74.41 lakh crore in June, marking a 13.2% on-quarter growth. Also, the quarter ending June 2025 saw a 16% rise in year-on-year (y-o-y) in net inflows. Net inflows in the month of June were at ₹49,095 crore. Disruptor product Earlier this year, Sebi introduced a new product called Specialized Investment Funds (SIFs), with a minimum investment requirement of ₹10 lakh. Positioned as a higher-risk option compared to mutual funds, SIFs are designed to bridge the gap between mutual funds and higher-ticket products like PMS and AIFs, where the minimum investment is ₹50 lakh and ₹1 crore, respectively. One reason why PMS and AIF players are now seeking mutual fund licences is that only mutual funds are permitted to launch SIFs. These funds can employ riskier strategies—such as long-short and sector rotation—that PMS and AIFs traditionally offered. The catch for the alternatives industry is that SIFs are taxed like mutual funds (no tax on churn), which could prompt some investors to choose them over PMS or AIF options, say experts. 'PMS and AIFs see an opportunity in managing a SIF business which can be only possible if they have a MF license. They can broaden their target audience and reach by introducing flexible products in SIF as it offers lower ticket size than a PMS or an AIF, targeting the mass-affluent investors who do not classify as HNIs," said said Debasish Mohanty, chief strategy officer at the Wealth Company Mutual Fund. Edelweiss MF, Mirae Capital Asset Mutual Fund, and SBI MF have so far announced their plans to enter the SIF space. New revenue stream With Sebi's recent clampdown on the F&O segment squeezing broker revenues, many industry experts see asset management as the next natural extension for broking firms. (LINK STORY) The new Sebi regulations, especially those related to IT infrastructure, apply uniformly to all regulated entities, not just brokers. This means most of the required systems and compliance costs are already in place for brokers, said Jimmy Patel, managing director at Quantum Mutual Fund. He said with these synergies and a need to diversify revenue streams, launching an AMC becomes an attractive next step. 'The only major additional expense in starting an asset management company (AMC) is research and fund management itself," Patel said. Fund management costs can also be lowered at the start by launching passive products. For instance, Zerodha entered the space with passive funds. More recently, Choice AMC Pvt Ltd—whose parent company is a broker—announced plans to begin with passive products such as index funds and ETFs. Importantly, the cost of running an AMC can be kept under control. 'Conventional models with active fund management and wide distribution networks require significant spending on research, fund managers, and physical offices," said Sandeep Bagla, chief executive officer (CEO) of TRUST Mutual Fund. 'However, newer approaches, such as digital distribution and quant-based strategies, reduce costs by minimizing fund management expenses and relying more on technology," Bagla added. Untapped potential The mutual fund industry is very underpenetrated in India, hence more people want to tap this space, say experts. 'India is currently a very underpenetrated MF market, and we need more mutual funds as the industry cannot be concentrated in the hands of a few top players," said Patel. As of June, the average AUM for the top 10 mutual funds make 76% of the total AUM of the mutual fund industry, as per the Association of Mutual Funds in India (AMFI). According to data from AMFI and Sebi, as of March 2025, India had 5.3 crore unique investors in mutual funds. This number is much lower than the 19.25 crore total demat accounts in India as of March end. If we look at the total MFs, which are 53 currently, the number of PMS players is 466. While the latest data on AIFs could not be immediately sourced, the total as of March 2024 was 1,283, including category 1, 2, 3 AIFs, as per Sebi. What's ahead? In the next one year, we might see the total number of mutual funds touching around 60-65, said Bagla. 'Even though we might see many entering the mutual fund space, their success will require consistent performance and trust unlike broking, where clients can switch easily for better service or lower fees," said an industry person. The person added that entry into the MF space was easy, but no player can grab a significant market share in the first couple of years.
Time of India
05-08-2025
- Business
- Time of India
AI can code, model, and hire; but that's not even the real threat. It's what comes after automation
Synopsis Artificial Intelligence is no longer just replacing low-skill labor—it's now targeting white-collar roles like coding, HR, and financial modeling. Experts like Saurabh Mukherjea warn that repetitive knowledge work is becoming obsolete, especially in economies like India's. But beyond job loss, AI poses a deeper risk. Geoffrey Hinton, known as the 'Godfather of AI,' cautions that advanced systems may soon develop their own internal reasoning, making them incomprehensible—and possibly uncontrollable—for humans.
Mint
30-07-2025
- Business
- Mint
India's Nifty 50: A royalty in valuations but commoner in returns
India's Nifty 50 might be wearing the crown when it comes to premium valuations in Asia, but its recent performance has been anything but royal. Despite its lofty valuation, the benchmark index of the National Stock Exchange has risen just about 1% over the last three months. Once regarded as a resilient outperformer in the region, the Nifty 50 has recently lost its edge, slipping into the underperformer bracket and trailing not only its Asian peers, but also several developed markets. According to Bloomberg data, the Nifty 50 is currently trading at a steep price-to-earnings ratio of 24.2 times, making it one of the priciest markets in Asia. For context, Japan's Nikkei is at 19x, Taiwan's Taiex at 19.2x, China's CSI 300 at 16.9x, South Korea's Kospi at 14.7x, and Hong Kong's Hang Seng is way lower at just 12.2x. Read more: NSDL IPO: Reasonable valuation, strong moat, and room to reclaim growth Having posted just a 1.2% gain in the past three months, Nifty is barely ahead of Malaysia's FTSE Bursa Malaysia KLCI, which rose 1%. In fact, Nifty has found itself at the bottom of the Asia pack, while peers like Japan's Nikkei, Taiwan's Taiex, and others mentioned above have surged between 8% and 26%, according to Bloomberg data. Even developed markets like the US' S&P 500 rose 15% in the past three months, while Germany's DAX is up 7%, the data showed. 'This should have been India's time to rally especially with the dollar losing strength and emerging market currencies gaining ground. But instead, the economic slowdown and expensive stock valuations are keeping foreign investors at bay," said Saurabh Mukherjea, founder and chief investment officer (CIO) at Marcellus Investment Managers. Beyond the weariness from persistent valuation concerns, a major factor behind the underperformance of Indian equities relative to other markets has been the lingering global economic uncertainty, said Nirav Karkera, head of research at Fisdom. 'There's growing uncertainty around the US economic direction and its monetary policy stance. At the same time, trade protectionism is quietly picking up across the globe, partly as a ripple effect of the US tariff actions. This mix is making global investors nervous," he added. Even with steady domestic inflows through systematic investment plans (SIPs), the Indian mutual fund industry continues to hold a sizeable cash pile, reflecting a cautious stance. At the same time, foreign investor confidence remains patchy, with their buying activity still lacking consistency. Since January, domestic institutional investors (DIIs) have consistently pumped money into equities every single month, with net purchases totaling a massive ₹4.04 trillion, according to BSE data. Foreign institutional investors (FIIs), on the other hand, have been far less predictable. After starting the year as net sellers, FIIs briefly turned buyers from March to June, only to return to the selling mode in July. Overall, FIIs have pulled out ₹1.28 trillion from Indian equities so far this year, as per NSDL data. Read more: Bulls and bears clash at 25,200: Will Nifty break free? Besides, market experts say this hesitation stems from subdued consumption trends, and a slower-than-expected earnings recovery – all of which are weighing on market sentiment and keeping capital at bay. Other weak spots The ongoing impasse in trade talks between the US and India remains a significant worry for investors, with no clear resolution in sight. This uncertainty adds to the overall discomfort in the market. The two sides remain in discussions over an interim trade agreement, as the 1 August deadline approaches. The date marks the end of the suspension period for tariffs—up to 26%—originally imposed by US President Donald Trump on several countries, including India. According to reports, a US delegation is scheduled to visit India on 25 August for the next round of talks on the trade deal. On the corporate front, while Q1 FY26 financial results have been a mixed bag, Karkera noted that the recovery in India Inc's earnings may be delayed by up to two quarters. 'Even the earnings of index heavyweights have struggled to captivate investors, which signals that the anticipated earnings growth might take longer to materialize than originally expected," he explained. The Nifty 50 has recorded single-digit profit growth for the last seven quarters, except in Q1 FY25, when it saw a de-growth of nearly 7%, Bloomberg data shows. For Q1 FY26, so far 25 companies in the index have reported their earnings, with an average profit growth of about 5% year-on-year. What would revive the momentum? 'Our economy has entered a cyclical downturn and the earnings growth has slowed over the last four quarters… it's not evident whether it will revive any time soon," said Mukherjea of Marcellus Investment Managers. Vinay Jaising, CIO and head of equity advisory at ASK Private Wealth, which manages over ₹44,000 crore in assets, highlighted a notable trend: while Indian equities have underperformed compared with the global markets, capital is still flowing into riskier assets such as US equities. He said even though the blue-chip or large-cap indices have remained flat over the past three months, the Nifty Smallcap 250 has gained nearly 11%, indicating that select investors are still chasing growth and higher-risk opportunities. Read more: Kotak Bank trades at a discount to top private peers. A key ratio reveals why 'What could potentially drive a sustained upward momentum in headline Indian equities is a recovery in earnings growth, especially in B2C (Consumption), which still appears to be one or two quarters away, and a revival in private capex, which is yet to reflect the benefits of recent interest rate cuts," Jaising added. Indian companies have been slow to ramp up capital expenditure, despite the Reserve Bank of India cutting policy rates by total 100 basis points since February, its first easing move in five years. The muted response reflects lingering caution. For the Indian markets to inch higher, 'we must maintain the earnings growth momentum," said Alok Singh, CIO at Bank of India MF. 'While there are concerns, such as muted revenue growth and lacklustre private capex, these do not warrant an immediate de-rating," Singh said. However, if these issues persist, a 'gradual de-rating" in valuations is likely over time, he added. The outlook for equity returns largely depends on a revival in consumption and a rebound in earnings growth, factors that could also help restore foreign investor confidence in Indian markets. Read more: FPIs struggle to shake off fears, bearish bets hit 4-month high
