Consumer Business to Benefit from GST

What next for this market? We continue to remain positive from a medium-term to long-term perspective on our equities but what is little bit worrying is some of the pockets of the markets are not correcting at all. So there is this zone of overvaluation especially in small-cap and microcap stocks. That is where one needs to be very cautious about. Other than that if one is making staggered disciplined investments even at these levels in large-cap or large-cap oriented funds, I think there is every chance of getting healthy returns from the market.

On GST and how are you looking at playing consumer? Most of the consumer businesses are going to benefit from GST, it simplifies the entire structure and also in many cases, there is going to be reduction in overall tax incidence

View on the banking stocks: Not much, we continue to believe that incrementally it is going to be beneficial for retail focused banks because that is where the credit growth is happening and that is where the NPA issues are also lesser and continue to believe that banks, which are focusing on retail business will continue to gain incremental market share and also will have healthy balance sheet. As far as Insolvency and Bankruptcy Code (IBC) is concerned, still the entire picture is not clear but at least couple of banks have mentioned that they have adequate provisioning.

Some of the good companies, they have been so well discovered and you are paying almost top dollar price for some of these. Is that a bit of a worry for your existing portfolio as well? You have to top up, right? We look at what is the growth of a particular company in the foreseeable future which we can project compared to what market is going to offer and what the valuations are on relative basis. Valuations, ideally we may have liked them to be at lower levels but since there is a disparity in terms of earnings growth in the entire market, the pockets which have been showing higher earnings growth are generally traded at higher valuations in this kind of a market and that is the case. So to an extent rather than focusing on individual valuations one will have to look at the entire portfolio of valuations. For us that is more important because once you diversify, you need to see what is the portfolio of valuation and what is the portfolio of expected earnings growth. On that basis most of our funds, in fact all are funds are looking at higher earnings growth than the market for financial year 18 and 19 at the portfolio level and we are paying possibly similar valuations or slightly lower valuations compared to the market. So that gives us comfort that we are not overpaying for the portfolio as an aggregate and expected earnings growth is higher than the market.

On autos: Earlier we were focusing more on urban consumption. Now we have also added stocks which are based on rural recovery and post GST we have seen price cuts across many sub-segments of automobile industry which should also enable higher demand in the category and the raw material prices have not moved up, so there is going to be no pressure on margins.