Prashant Jain, Founder and CIO, 3P Investment Managers expects Nifty to deliver an earnings growth of 18-20 per cent in this fiscal largely driven by the metal companies and strong balance sheet of other corporates.
“Metal prices have gone through the roof due to the supply chain disruption and ongoing West Asia war. Indian companies have done well to capture this upside and this will aid Nifty to deliver better returns despite growing global uncertainty,” he said.
While metal companies’ weightage in the Nifty is small, the delta on earnings can be quite significant given the nature, he added at the ICICI Securities annual event India Investor Conference ‘India Rising: The Next Chapter’ here on Monday.
The markets will bounce back as soon as the war comes to an end as the momentum still remains strong, the sentiment should improve and growth is going to come back again, he said.
Manish Banthia, CIO, Fixed Income, ICICI Prudential AMC said fast growing sectors do not always translate into strong investment returns, because growth is often overestimated and priced in too aggressively.
In fact, some of the best-performing investments over the last five years have come from slower-growing areas such as large banks, utilities, and defence companies, he said.
Shantanu Rastogi, Managing Director-Head, India, General Atlantic said India needs high-quality, long-term capital—whether from global corporations that bring technology, talent and capital, or from private-equity investors with patience and a long horizon.
“Take Vietnam, for example: there are fewer than 10 companies one can meaningfully trade, even in the public markets,” he said.
In contrast, India benefits from scale, a strong talent base, and the ability to build businesses that can reach meaningful size simply by serving a large domestic market, he said.
Part of the valuation premium reflects the structural growth story and the presence of a deep domestic capital pool, which many of those other markets simply do not have, said Rastogi.
Sanjay Kukreja, Managing Partner, ChrysCapital said: “We hear a lot of negative macro news, but whenever I start feeling discouraged, I meet founders from companies in our portfolio and see businesses still growing at 30 per cent this year”.
In the portfolio of roughly 25 companies, including slower-growth IT businesses, the aggregate earnings growth expected is about 22-25 per cent this year. Even if inflation and other factors bring that down closer to 18-20 per cent, he added.
Banthia said capex-related sectors should outgrow consumption, and discretionary consumption should outgrow staples.
However, from an investment standpoint, large banks look especially compelling as their structural competitive advantages are deepening, and they should continue to grow faster than the system, he said.
At the same time, the de-rating has been very sharp—from roughly four to four-and-a-half times book value down to around 1.5 times, he added.