We are extremely positive on smallcaps; see no stopping in realty stock surge for now: Varun Saboo

Elixir Equities Director, Dipan Mehta, argues that new age companies such as Zomato, Policy Bazaar, Nykaa, and Paytm are stocks of the decade of the 2030s and could be huge multibaggers over the next 5-10 years. However, these companies are still in their investment phase, which reflects in their P&L, although they are making strong efforts to get into EBITDA positive. Regarding concerns about Page's decline, Mehta suggests that a demand slump due to higher inflation and uncertainty around weather patterns may have impacted Page industries.

Banking, NBFCs, and MFIs are good places to invest as the Indian banking sector has cleaned up its books, making credit growth pick up significantly. Capital goods and power sector are well-poised for growth in the next 2-3 years with high government investment in railways, highways, and airports. Companies in the capital goods sector, despite some trading at high price-to-earnings ratios, are expected to contract PEs due to anticipated high growth in the next few quarters. Additionally, the pharma sector is expected to show strong earnings growth in the next 2-3 years.

According to Raamdeo Agrawal, Chairman of MOFSL, pure internet companies such as Zomato, Swiggy, and PolicyBazaar can become large players in terms of profit pool. Companies like Bajaj Finance, Zerodha, and Angel One, which are traditional businesses leveraging the power of technology, are also poised for accelerated growth. Another area for growth is the real estate industry, which is showing profits after years of losses.

“We are seeing the earnings growth trajectory of India led by banks, the capital goods sector doing very well and FII inflows. In the last week or two, FYTD is up a solid $18 billion. But yet, over three years, we are a negative number. If India's GDP is growing at four times that of the rest of the world, the risk-off trade should be a big vantage point for India.”

“There is a certainty in India that one allows one to think from a 15-20 year perspective. There is a kind of money which we are expecting. I will be personally very surprised that after May election, political instability, if $100 billion does not come in India through bonds and equity. Normally $15-20 billion comes.”

The last few months are more for campaigning/sloganeering rather than actual spending. To that extent, I feel that we may see a tempering of actual capex spend from the government over the next couple of quarters. A real pick-up would be once the new cabinet is in place. For now, we would like to take advantage of any volatility in the prices of capital goods companies to add some from the ‘flow category of companies to our portfolio.

“It is very difficult to say that whether it is a midcap or sentimentally by numbers it might look like a largecap but within the domestic consumption space, organised retail is a very good space where we have a decent allocation and organised retail shows no impact of what is happening outside India.”