India To See Margin Growth Over Sales Growth In FY24, Says Motilal Oswal's Prateek Agrawal
Agrawal said that Indian markets may not see large FDI inflows any time soon as overseas debt is more attractive.
Indian companies will witness higher margin growth than sales growth in fiscal 2025, according to market veteran Prateek Agrawal.
"We should end up seeing margin increase...across the board, so even commodities companies will see margin increase. The story for next year is less of sales growth and more of margin growth," Prateek Agrawal, executive director of Motilal Oswal Asset Management Ltd., told BQ Prime.
According to him, commodities companies may see rise in margin as the price of coking coal that they import may have fallen.
Agrawal doesn't expect much impact from central banks tightening rates on growth. "The multiplier that banks are supposed to deliver may have happened, but to a very small extent," he said.
Equities More Attractive Than Debt
Before the tax changes were implemented in April, debt seemed to be a bit more attractive as compared with equities, Agrawal said.
However, after taxation changes, equities have become more attractive for domestic investors. "Incrementally, you should see more HNI money coming into equities as we go forward, further building up the equity story," he said.
However, he cautioned that Indian markets may not see large FDI inflows any time soon as overseas debt is more attractive.
Key Themes
Talking about the "not-so-nice" quarter performance of the IT sector, Agrawal said that the outlook is still hazy and the space may move sideways. In terms of the financial sector, it is having issues of regime change, merger, etc, he said.
The brokerage is positioned on stock-specific and non-Nifty themes. It has more bottom-up ideas for most of the large Nifty spaces, Agrawal said.
It is staying away from technology services companies that are linked to the U.S and are facing issues. But, it is inclined towards smaller companies focused on verticals that have tailwinds.
Having reasonable growth for banks will be difficult in FY24, when economic growth falls to 10.5%, Agrawal said. High quality and high growth investors will prefer banks and non-banking financial companies with higher growth structure, he said.
