Piper Serica’s Managing Director and Chief Funding Officer Abhay Agarwal believes the world’s largest cash managers are in settlement on one factor—India is on the prime of the checklist in terms of allocating capital.
Talking to Newsstate24 Revenue, Agarwal stated, “Each massive asset allocator has a optimistic view on India.” The explanation, he added, lies within the nation’s huge medium- to long-term potential, sturdy home capital inflows, and the growing consistency of long-term international funding.
“There’s a realisation that even at a $5 trillion market cap, India continues to be exponentially small in comparison with China at $18 trillion and the US at $60 trillion. That makes our development runway very lengthy,” he stated. He identified that India continues to be seen as a market able to outperforming most different geographies globally.
Overseas flows, he defined, are coming via a mixture of exchange-traded fund pushed passive allocations and energetic bets by international portfolio buyers. Whereas the ETF flows are simpler to trace, energetic inflows get revealed extra regularly, typically changing into seen solely after 1 / 4 via shareholding information.
He emphasised that regardless of short-term world warning, “India is a long-term story that’s too compelling to disregard.”
Agarwal stated Piper Serica’s personal money holdings are modest—solely 6-10% of its portfolio—whereas the remaining is deployed in fairness. “We assume fairness capital despatched to us is supposed to be invested. Until we see very clear mispricing, we desire to remain totally invested in high-quality names,” he stated.
Abhay Agarwal, Managing Director, CIO at Piper Serica (Picture supply: LinkedIn)
Piper Serica’s Favourites
Electronics Manufacturing Providers: Agarwal is bullish on the EMS sector, notably shares like Dixon Applied sciences (India) Ltd., which function in Piper Serica’s mannequin portfolio. “These firms are set to profit from the worldwide provide chain shift and India’s personal electronics manufacturing push,” he stated.
Small Banks & NBFCs: In what he known as a “contrarian name,” Agarwal stated Piper Serica has began including small banks and non-banking monetary firms to its portfolio. “Whereas there may be nonetheless negativity across the sector, particularly resulting from considerations on unsecured lending, that is the underside of the cycle—and that’s when sensible bets get made,” he stated.
The agency is steering clear of huge monetary establishments buying and selling at sky-high valuations, as an alternative favouring lenders with cleaner stability sheets and optimistic commentary. He cited RBI’s ongoing liquidity help and focused credit score flows to micro-lenders as key tailwinds.
Prescribed drugs & Healthcare: Piper Serica stays chubby on the pharma sector. Agarwal stated the agency’s holdings span throughout hospitals (Apollo Hospitals Enterprises Ltd.), home healthcare service suppliers, massive generic exporters, and contract drug producers equivalent to Dr Reddy’s Laboratories Ltd.
“The US generics pipeline is the strongest it has ever been. Many Indian pharma firms are seeing extra beneficial scrutiny from US regulators and are higher ready for launches,” he stated.
Piper Serica’s Dislikes
IT Providers: Agarwal made it clear that Piper Serica has no publicity to IT companies and hasn’t for 2 years. Regardless of the correction in inventory costs, he argued that fundamentals don’t help present valuations. “If an organization is guiding for simply 2-3% development with margin stress and lack of innovation, it doesn’t deserve a 20-25x earnings a number of,” he stated.
He believes buyers are nonetheless caught on IT’s historic picture as a cash spinner, however the macro actuality is completely different now.
Giant-Cap FMCG: One other sector Piper Serica has averted is large-cap fast-moving client items. Agarwal cited intense competitors from native manufacturers, stagnant quantity development, and the lack to push via worth hikes. “These firms are buying and selling at 40-60x P/E multiples with very low development visibility. That’s not investor-friendly,” he stated.
He added that the idea these are ‘defensive’ performs is more and more being challenged, particularly as valuations stay stretched and market share is beneath stress.
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