Mr Rupesh Patel

Indian equity markets have delivered very strong returns in last 12 months with benchmark Sensex delivering about 28% returns and BSE Midcap Index about 46%. It would be prudent for investors to moderate their return expectations and not to extrapolate the returns. We believe from hereon; stock performances would be a function of earnings growth. As effects of demonetization and GST abate, the earnings growth should start improving in coming quarters. With the outlook on global growth improving and credit costs normalizing for the banking sector, the outlook for earnings growth on aggregate basis in FY’19 and FY’20 is positive and in high double digits. In terms of portfolio construction, we continue to maintain our overweight on beneficiaries of government sector capex and consumer plays. 

2. What is your investment space? Any stock specific traits which makes it part of your portfolio? What?

In terms of our investment universe, we broadly focus on two sets of companies. First would be companies which can compound their earnings over a long period of time, are efficient users of capital, run by decent managements and have innate strengths in their business models. These form the core of our portfolio. Second set is of opportunities, which are more tactical in nature, exist in market due to stock specific/industry specific/market specific developments and makes sense to buy at certain price. 

3. What kind of stocks you avoid, why?

In investing you never say never. However, I generally desist from investing in companies which, in the past have shown scant regard for minority share holders’ interest and the ones which have a history of bad capital allocations.

4. Is there any pre-emptive miss you regret (for instance, not adding a particular stock in your list or not possessing enough of it)?

I regret missing on some of the long term structural compounding stories, particularly the ones where I did not buy or exited early considering high near-term valuations.

5. What will be your advice to investors?

Equity is a volatile asset class and has delivered superior tax adjusted returns over longer periods. However, to benefit from the same, one has to remain invested through the volatile phases. Hence, investors should not get too much worried about events which may have near term impact. We believe, India offers a long-term growth opportunity. In terms of earnings, we are at the cusp of recovery in corporate earnings and market returns would be reflective of the same. Hence, equity market corrections can be considered as good opportunities by investors to increase their equity exposures.