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Indian consumer businesses investing in new products and markets attract investor capital amid uncertainty
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Sectors like commodities, pharmaceuticals, and IT show positive cash flow cycles, says Kenneth Andrade
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Indian equities trade at 21 times forward valuations, below long-term average, making market attractive
Indian consumer businesses that invest in new products and expand their presence in new markets are a good area for investor capital amid economic uncertainty, according to Kenneth Andrade, founder and chief investment officer of Old Bridge Mutual Fund.
"India will be a growth market. "You have to look for companies that generate cash flows, because that becomes growth capital in the next cycle," Andrade told NDTV Profit. "Domestic consumer businesses that invest in new products and new markets are the place to be. Indian corporates are now making models in this new regime," he added.
He said the cash flow cycle is running positively in sectors like commodities, pharmaceuticals, and information technology, without mentioning specific companies.
As for Indian equities' underperformance this year, Andrade said the time correction and consolidation make it attractive for investors in a market currently trading at 21 times its forward valuations, below the long-term average.
However, the single-digit growth in earnings may not change materially soon, he said.
For IT, Inaction Better Than Action
Kenneth Andrade said he expects Indian IT companies to weather the disruption caused by issues like the H-1B visa fee hike and the US growth slowdown in the medium term.
"Inaction is better than action, and this is the time to wait on it. These companies have been through multiple cycles of change, and I expect their financial muscle to help get through near-term pain," the veteran fund manager said.
India's software exporters have been battered this year due to headwinds in the US, their biggest market, and technological disruption caused by artificial intelligence.
Watch the full interview here:
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