Mr Mahesh Patil

In an interview with Anjali Raulgaonkar from Capital Market Publishers, Mahesh Patil, Co-CIO, Aditya Birla Sun Life AMC said, We could see broad based growth across sectors and the pressure points on some of the sectors are easing off. We continue to follow the philosophy of investing in companies that could show growth and are available at reasonable valuations.

Excerpts:

1. Equity markets are already up. Is there more room to grow? How are you approaching market right now?

The performance of markets in 2017 has been impressive with a return of about 30% on large cap indices. However, if you look at longer term returns on a 3/5/10 year basis, it is low. The important thing to note is that both in terms of economy and corporate earnings, we are at the bottom of the cycle. While the P/E expansion may not happen much but the catch up with earnings growth is possible. We are estimating 19% growth for FY19 for Nifty 50 companies. We could see broad based growth across sectors and the pressure points on some of the sectors are easing off. We continue to follow the philosophy of investing in companies that could show growth and are available at reasonable valuations.

2. What is your investment space? Any stock specific traits which makes it part of your portfolio? What?

We have more than 300 companies in our investment universe across market capitalizations. We look at companies that have strong competitive advantage, faster growth, good management, large addressable market, superior product, technology etc.

3. What kind of stocks you avoid, why?

We are particular about investing in quality stocks that correct less in market correction and rebound quickly in case of market recovery. We keep our portfolio well-diversified portfolio, while staying away from high momentum stocks.

4. Is there any pre-emptive miss you regret (for instance, not adding a particular stock in your list or not possessing enough of it)?

When we invest, we formulate a certain thesis on each individual investment to predict what should be our target price. There are certain periods where that thesis does not play out and plays out different. This could lead to misses. Most times we get back to basics to re-analyse our assumptions and how we defer from market opinion. It is part and parcel of fund management. As long as we capture more correctly than missing opportunities, our fund performance should be alright.

5. What will be your advice to investors?

There is full conviction that India has strong growth potential in the medium to long term and the stock markets provide an opportunity to participate in it. However, the return expectation should be reasonable. As long as investors are seeking lower double digit returns for a 3- 5 year investment, they should not be disappointed. The synchronous global growth, continuous reforms from government that should bear results going forward and earnings rebound in second half of fiscal augur well for markets.

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