Latest news with #SiraliGupta
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Business Standard
21 hours ago
- Business
- Business Standard
Smallcaps offer Alpha; midcaps look expensive: PGIM India's Aniruddha Naha
Amid the ongoing conflict in West Asia, ANIRUDDHA NAHA, CIO – Alternates, PGIM India Asset Management Company, cautions investors that a sharp rise in crude oil prices could pose a significant risk to India's economic stability. In an email interview with Sirali Gupta, he also suggested taking some money off midcaps given its high valuations. Edited excerpts: What are the key challenges that could weigh on Indian equities? The risk for India emanates from higher crude oil prices. Crude happens to be one of the largest imports for India and accounts for almost one-third of the import bill. Any geopolitical event that drives crude oil prices higher in a dramatic fashion would have implications for the Indian macro and could hurt the economic stability of the country. Should investors exit or trim exposure to any segment in this market? India probably offers one of the best equity markets to create wealth over the next decade. However, the segments where we see valuations on the higher side and one can take some money off the table is midcaps. Given the limitation of how midcaps are defined and are limited to 150 companies, continuous inflows in this segment leave limited upside in the near term. What are the themes you are optimistic about over the next 12–18 months? We remain positive on the revival of the investment cycle, now supported by improving data on private capex and rising government spending. With deleverage balance sheets and recovering demand, corporates are well-placed to invest. Consumption, especially lower-ticket discretionary spending, should benefit from income tax cuts and rising per capita GDP. What are the key advantages of long-only alternate strategies, especially in the context of small and mid-cap investing? Alternate strategies have the flexibility of being agnostic to benchmarks both in terms of market capitalisation and companies. This helps in building portfolios that could have very low overlaps with a benchmark and build a differentiated portfolio. One can limit the asset under management (AUM), which makes a lot of sense in small-cap portfolios. How do you generate alpha in smallcap stocks? While large and midcaps are well-defined, smallcaps include companies beyond the top 250 by market cap. As we go lower, one can fine manu undiscovered opportunities. We scout from a universe of nearly 4,000 companies, down to ₹500 crore in market cap. Given the growth potential and attractive valuations, we believe small caps offer the best alpha generation opportunities. Do you see alternate funds becoming part of mainstream investing? As per capita gross domestic product (GDP) rises and financialisation of savings takes centre stage over a period, the demand for Alternate assets will keep growing. Not only listed, unlisted but other asset classes will get introduced in the country. Having said that, Alternates will be a solution provider for spaces, where the mutual funds do not have a solution. They will be peripheral to the core mutual funds, but their share and innovations will keep increasing and driving their relevance. Your PGIM India Equity Growth Opportunities Series II Fund expects 28–30 per cent earnings growth in FY26 and FY27. What's driving that confidence? We believe there are still ample opportunities in small caps to generate alpha. Our focus is on identifying companies with strong earnings visibility—often quality businesses at the bottom of their cycles. As the cycle turns, earnings rebound and, with improved sentiment, there's potential for both earnings growth and P/E expansion.
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Business Standard
15-05-2025
- Business
- Business Standard
Investors should look at defensive plays for now: Achin Goel, Bonanza
As March 2025 quarter earnings season nears close, ACHIN GOEL, fund manager, Bonanza Portfolio, tells Sirali Gupta in an email interview that India Inc. is expected to see a recovery in the coming quarters, particularly in the consumer sector, driven by a revival in rural demand. Edited excerpts: Is border tension between India and Pakistan still a concern for the market? Indian markets have shown surprising resilience despite the recent border tensions. This is because investors were betting against a major escalation between India and Pakistan. The ceasefire is holding, but it's not just about border politics – several other positive factors are supporting the market's steady performance: progress on multiple international trade deals, encouraging AMFI data that's boosting retail participation, and growing buzz about foreign institutional investors increasing their India allocations. All these elements together explain why markets remain stable despite what could have been a major destabilising event. Easing border tensions between India and Pakistan is a significant positive for Indian investors; however, we can expect volatility due to ongoing earnings season and global uncertainties, especially tariff-related developments. We advise investors to adopt a balanced strategy focusing on defensive sectors like consumer goods and healthcare for stability, while selectively increasing exposure to domestic manufacturing sectors poised to benefit from shifting supply chains and potential policy support. Government-focused sectors like defence, renewable energy, and electric vehicle (EV) can be also considered to look into for long-term investment. What about financials? Given the current environment, the focus remains on domestic businesses, particularly within the financial sector. Banks, non-bank lenders, and other financial services continue to present compelling opportunities due to their strong fundamentals and growth potential. This sector's robust performance and critical role in the economy make it a key area of interest. How would you assess India Inc.'s performance in the March 2025 quarter (Q4-FY25)? India Inc.'s Q4-FY25 is likely to see revenue grow by 5-6 per cent, which was accelerated by consumer-driven sectors. The overall revenue for FY25 is estimated at 5 per cent, which is likely to be driven by strong performance in consumer-driven sectors like consumer discretionary products, services, and retail. The automobile sector's revenue is likely to grow 6 per cent in FY25, as retail momentum for passenger vehicles picked up and realizations rose owing to a change in the product mix and an increasing share of exports. Despite relatively flat revenue growth, operating profit margins are expected to widen, potentially reaching 8 per cent.
