Edited excerpts from a chat:
Given your emphasis on the BMV (Business model + moat + valuation) framework, how are you applying it today in light of the time correction that the Indian equity market has seen in 2025?
Amidst the time correction, the broader indices have shown resilience, with the Nifty50 up 4.5% in October, supported by healthy macro indicators such as a manufacturing PMI of 59.2, rising GST collections, and steady credit growth. The RBI has maintained a neutral stance, keeping the repo rate unchanged at 5.5%, aiming to balance growth and stability. In this context, the BMV framework continues to guide our approach, with emphasis on potential earnings growth, quality of management, and valuation discipline, alongside a bottom-up method to identify companies with superior and sustainable earnings growth. With earnings momentum gradually improving and macro fundamentals intact, the focus remains on businesses with robust models, sustainable moats, and reasonable valuations, particularly in sectors where earnings visibility is improving.
When you talk about “moat” in the BMV framework, which sectors or companies in India today meet that definition for you, and which are you avoiding?
Moat stands for sustainable competitive advantage. While it typically applies to companies, there are also certain sectors where India may have an edge over global peers due to access to cheap resources, talent, or technology. In that sense, all our portfolio companies possess a moat of some form. A typical example is large private banks, which have successfully reduced their cost of funds relative to competitors through technology, introducing savings products, and maintaining salary accounts with large corporations, giving them access to a large pool of low-cost funds. Similarly, metal companies in India, with access to high-quality resources at reasonable prices, are examples of sustainable competitive advantage. Some of these metal producers are among the lowest-cost producers globally. High-moat businesses, as a result, tend to generate high RoEs over time.
How do you read the Q2 earnings season at a broad level, and how has that changed your portfolio?
The Q2 FY26 earnings season has started on an encouraging note, with results from 216 companies in the Nifty 500 showing around 9% year-on-year growth in both sales and profit after tax. The data reflects stronger-than-expected traction in capex-driven sectors such as capital goods, infrastructure, and industrials. There has also been a notable improvement in private capex trends and order inflows. In banking, despite the fall in repo rates, margin compression has been limited, and credit growth remains healthy, supported by festive-season demand and GST rationalization. The overall takeaway is that the market is witnessing early signs of recovery, which are expected to sustain into the second half of FY26.
Between large private banks, small private banks, and PSU banks, which one do you think will outperform in 2026?
Early earnings trends indicate that large private banks have maintained strong operational performance with limited margin compression and continued loan growth. PSU banks have also shown improvement, aided by better loan growth and lower credit costs. Based on this, the relative strength appears stronger in large private and PSU banks.
Where do you see thematic opportunities for the next 12–18 months?
We believe domestic consumption remains a bright spot. A combination of GST rate cuts, benign inflation, and a good monsoon is likely to support demand. Additionally, the upcoming 8th Central Pay Commission’s wage revision in early 2026 is expected to provide a further boost by increasing household incomes. This stimulus, combined with strong government and private capital expenditure, makes themes around consumption, infrastructure, and capital goods favorable areas for the coming year.
2025 is largely the year of time correction. Do you see the tide turning in favor of bulls in 2026, given multiple triggers?
Driven by macro resilience, strong domestic demand, and foreign inflows, Indian markets have seen a broad-based recovery over the past few weeks. The near-term investment scenario remains constructive, supported by revived trade optimism following positive news around a potential India–US trade deal, policy continuity, and robust capex trends. Since the underlying economic setup and liquidity conditions remain favorable, market sentiment is likely to improve in 2026. However, trade negotiations and geopolitical developments remain important variables to monitor.
The performance of big IPOs hitting Dalal Street in 2025 has been mixed. How do you assess the quality of these new-age listings from a long-term wealth-creation lens, and are you finding any genuine value amid the frenzy?
We have avoided most IPOs due to unrealistic growth expectations and very high valuations. In contrast, we are finding superior opportunities in existing listed companies, where the risk-reward profile appears more favorable.
Foreign investors seem to be aggressively participating in primary issuances while simultaneously offloading positions in the secondary market — what, in your view, explains this divergence in FII behavior, and does it reflect a structural shift in how global capital is approaching Indian equities?
What we have observed over the years is that if fundamentals and risk-reward are right, capital eventually follows. The only question is whether it happens with a lead or a lag.
