Before analysing financial numbers, veteran investor Raamdeo Agrawal starts his investment journey by evaluating the narrative that a company or an entrepreneur presents.
"The story comes first, the numbers and the excel sheets come much later. I try to understand what exactly the entrepreneur is out to build," Agrawal told BloombergQuint's Niraj Shah during a BQ Edge webinar. The background story and future vision help investors understand the value of the enterprise, he said.
The entrepreneur's passion and involvement is another key element to consider, said Agrawal. However, the decision to invest should be taken only if the numbers align with the narrative, said the chairman and co-founder of Motilal Oswal Financial Services Ltd.
Sometimes people are very good storytellers, but the numbers don't match with the narrative. Where you strike gold is when numbers are better than the story.Raamdeo Agrawal, Chairman, Motilal Oswal Financial Services
Agrawal's views echo what Aswath Damodaran calls "the power of story". The valuation guru has argued that powerful narratives drive "corporate value, adding substance to numbers and persuading even cautious investors to take risks".
In the hour-long interaction, Agrawal also shared his views on value migration to electric vehicle makers, Indian real estate's moment of reckoning, and whether technology and specialty chemicals will be decadal themes.
Watch the full interaction:
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