Category: Excerpts

Source: Kotak Institutional Research Report

The Indian market (Nifty-50 Index basis) is trading at 21X FY2018E ‘EPS’ (free-float basis) and 17X FY2019E ‘EPS’.

Note that we project a very strong recovery in earnings in FY2019 after flat net profits in FY2018.

However, we have limited confidence in our FY2019E estimates given (1) little evidence of a strong turnaround in the economy, which can drive volume growth and (2) high margin and profitability assumptions in several sectors, which may be at risk.

Source: Tom McClellan

1. How’s business?
2. Really?
3. Could you expand on that?
4. Why?

–wrote Tim Hanso

This market resembles 1994-1995 that was the first bull market where FIIs were allowed entry into India and you had a massive liquidity boom from FIIs.

Just like that, we are seeing a big liquidity boom from local investors in this cycle.

What did I learn from 1994-1995 boom?

I learnt that you will have to actually implement asset allocation. Once the market goes into bull frenzy, you have to practice asset allocation.

The second learning that I learnt from 1994-1995 was that you do not move from good quality companies to bad quality companies just because they are cheap on price to earnings or price to book or things like that.

The third is that you cannot believe that you will actually get an exit on the way down. In 1994-1995 boom, no one got an exit on the way down. So I believe that it is very important to maintain your asset allocation in equity but if people think that they will be the last person correctly exiting the markets that is not going to happen

–said S Naren,CIO, ICICI Prudential AMC

Source: Raamdeo Agrawal Flame University Presentation