In a recent interview with CNBC TV18, Saurabh Mukherjea, the founder of Marcellus Investment Managers, shared his perspectives on the current market scenario, earnings outlook, and strategic investment moves. As the head of a prominent investment firm, Mukherjea’s insights provide valuable guidance for investors navigating the complex economic landscape.
1. Earnings Slowdown Amidst Peak Rate Cycle:
Saurabh Mukherjea began the discussion by pointing out that the market is currently at the peak of the rate cycle. He anticipates an earnings slowdown, especially for large companies, which is a natural consequence at this stage. Mukherjea highlighted that despite the slowdown, the Indian economy is still robust, with companies exhibiting 15-20% earnings growth, even after the global economy has experienced a slowdown in recent years.
2. Market Overview and Positive Outlook:
Contrary to recent market fluctuations, Saurabh Mukherjea expressed optimism about the market’s overall health. He acknowledged that the small-cap segment has witnessed significant growth, with a 150% increase over the past three years. On the broader benchmark, large-cap companies are also performing well, with the Nifty showing high teens in terms of earnings compounding. Mukherjea emphasized that the market, as a whole, is in good shape.
3. Saurabh Mukherjea’s Market Prospects for 2024:
When asked about the prospects for 2024, Mukherjea provided a positive outlook. He attributed this optimism to political clarity, growing government capex, and early signs of a private sector capex upturn. According to him, if these factors align, 2024 could be another favorable year for well-run large-cap companies.
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4. Strategic Stock Entries:
Saurabh Mukherjea shed light on Marcellus Investment Managers’ recent strategic entries into specific stocks. One notable addition is Amy Organics, a company supplying intermediates to major Pharma holdings. Another key move was into Shanti Gears, the second-largest gears company, with expectations of gaining market share in the coming years.
5. HDFC Bank Analysis and Investment Strategy:
Discussing HDFC Bank, one of Marcellus’s significant positions, Mukherjea reassured investors about the bank’s fundamentals. Despite recent market concerns, he highlighted HDFC Bank’s consistent loan book growth and its market share dominance over the last 25 years. Mukherjea sees the recent issues as transitional and expressed confidence in HDFC Bank’s long-term prospects.
6. The Private Capex Theme:
Saurabh Mukherjea emphasized the importance of the private capex theme, mentioning strategic investments in companies like RHI Magnesita, Shanti Gears, and SRF. He anticipates that as the Western economies recover, the demand for Indian IT companies providing AI and cloud services will increase, creating substantial opportunities.
7. IT Services and the Move to the Cloud:
On the IT services front, Mukherjea believes that as Western economies move to cloud and AI, Indian IT companies will witness substantial growth. Marcellus has maintained positions in TCS, LTTS, and DataLXC, anticipating that the demand for IT services will surge once the Western economic cycle turns.
Conclusion:
Saurabh Mukherjea’s insights provide a comprehensive overview of the current economic landscape, emphasizing the resilience of the Indian market amidst global challenges. Investors can gain valuable perspectives on potential sectors for growth and strategic considerations when navigating the ever-changing financial markets. As always, it’s crucial for investors to conduct further research and analysis based on their individual financial goals and risk tolerance.