Presentation by Bharath S, Head Equities, and Anand Radhakrishnan – CEO (Jun 12, 2024)
Investment Themes today
- Make in India for India and the world
- Urbanisation/ Premiumisation and formalisation of the economy
- Sustainability
- Technology transition and digitisation – EV, environment (sustainability), Digital penetration
Market Outlook
- Pick up in corporate earnings looks sustainable. We expect moderating top-line growth even as margins recover
- Revival in private capex is backed by higher consumption and higher capacity utilisation. Industry is more discerning in putting new capacities in this cycle.
- Housing cycle can continue for another 3-4 years. Housing has a multiplier effect on the economy
- Growth in manufacturing is targeted at import substitution, and China +1. Growth in domestic consumption helps. We expect volume growth to rise as demand reverts to mean
- Physical assets – we expect a sustained demand for real estate and precious metals
- Capex – order backlog for industrials is healthy
- Credit – retail credit drives growth. Industrial credit is being led by MSME
Sector Outlook
- Sectors with improving trends – Industrials, travel, hospitability, real estate, auto and healthcare
- Sectors with weakening trends/moderating growth – Chemicals IT and pockets of discretionary consumption
Risk
- Domestic flows have accelerated especially in small and mid-cap. Sundaram’s tilt will be towards large cap
- Large derivative positions by retail investors can lead to increase volatility.
- There is a risk of overpaying
