Sustainable Earnings, Capital Efficiency To Drive Valuations: ASK's Sumit Jain
Manufacturing is poised for significant value creation in the next few years, says Jain.
Sustainable earnings and efficient capital management are key factors that will drive valuations in the long term, according to ASK Investment's Sumit Jain.
The mix of the ability to sustain earnings in the long term along with good capital efficiency are important considerations while evaluating businesses, Jain, deputy chief investment officer at ASK Investment Managers Ltd., told BQ Prime's Niraj Shah.
"Manufacturing in India for India and in India for the world" represents immense long-term opportunity, according to Jain. The entire theme of manufacturing is poised for significant value creation in the next few years, he said.
Within the capital goods space, niche businesses that cater to specific demands and have reasonable valuations represent immense untapped investment opportunities, Jain said.
The current capex cycle is significantly different than the cycle in the early 2000s, with an increased focus on short cycle capex, automation, brownfield expansion, and smaller greenfield expansions, he said.
In the banking, financial services and insurance sectors, credit growth is expected to continue to outpace growth in the gross domestic product, he said.
Non-banking financial companies may be a better bet than banks in the short term. Given the considerable expansion in the bank's net interest margins last year, it may now be the NBFCs' turn for NIM expansions, Jain said.
