Indian equities have already priced in some of the positive macroeconomic developments that may happen in 2024, but opportunities can always be found with a bottom-up approach, according to Malabar Investments founder Sumeet Nagar.
The positives include a reasonably well-poised economy, the possibility of interest rates coming down, and more foreign capital coming in, Nagar told NDTV Profit in an interview on Tuesday.
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"The biggest worry is that markets are forward-looking and some of the positives are already priced in," he said, pointing out that globally high valuations and a probable recession were also some of the risks.
Nagar invests in companies and management teams. "We are not market investors."
Why Nagar Is Positive On Following Stocks
Neuland Laboratories
Capabilities for global pharmaceutical firms to trust a company with its intellectual property take not years but more than a decade. That is something that Neuland Laboratories Ltd. has done quite well, and it has come to fruition now, according to Nagar.
Neuland has had a very strong run-up; the earnings actually did extremely well, he said. Therefore, its valuation is still fairly reasonable. Nagar highlighted that commercialisation of many molecules and their capacity to cater to growth would help future growth.
Hatsun Agro Product
Short-term challenges, including lower volume or margin because of high procurement prices, may impact Hatsun Agro Product Ltd.'s performance for one or two years, but "every five years, it has grown", he said.
Nagar underscored that Hatsun has a long runway to grow in terms of market share by expanding products and its geographical presence.
Aptus Value Housing Finance India
For Aptus Value Housing Finance India Ltd., the returns have come in chunks, Nagar said. "The company's operating performance has been superb as even in Covid, they grew in strong double digits."
Downward pressure was created since it got listed at an elevated valuation, he said. He considers Aptus as the "most-profitable" financial company and expects it to grow 20–25% over many years.
Aurionpro Solutions
Aurionpro Solutions Ltd. has good products that are liked by the banks, he said. "We like the banking software space."
He is positive on the management change as Aurionpro brought in a very-high-calibre team. And since most of the cost is fixed, sales growth can lead to a very-high profit growth.
Vaibhav Global
While the last two years have been tough for Vaibhav Global Ltd. after a high base of Covid-driven buying, Nagar still sees growth coming in.
He underlined the company's two decisions that had been negative in the short term but would be positive in the long term.
The robotic-distribution system has resulted in increased productivity and cost optimisation. The other is expansion into Germany because it's a business "where you don't buy capacity but invest through operating expenditure", he said.
It led to a hit on the profit & loss statement but resulted in expanding Vaibhav's addressable market quite significantly, according to Nagar.
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