City Buoyant Financial News

Viral Berawala, Director, Buoyant Capital, says, “IT again has become a 7-8% growth sector plus add 3 or 4% for dividend. So IT reverts back to being a 11-12% growth sector and valuations for most companies are at least one standard deviation above average. In IT, we are unlikely to make disproportionate returns from this point on. It maybe an okay place to hide but not for making great returns.”Do you like the power space and which part of the value chain in power would you be most bullish on?In power, the August volume growth has been tremendous.

«We now have more smallcap folios than largecap. The aum for smallcap and largecap indices is almost alike and they are buying the same illiquid stock which is creating this very large dislocation. How does this unwind?,» says Jigar Mistry, Co-Founder, Buoyant Capital. Help us with your take and your outlook for the Indian markets for 2025 because 2024 has been a very interesting one, but 2025 a lot of these key drivers could be there, there could be rate cuts, the new us president-elect will be there. So, what is your outlook and expectation from the Indian markets? Jigar Mistry: We need to take a step back from the overall equity experience that we seem to be having. If you look at your over a 5 or 10-year rolling returns, the EPS growth and the share price growth at the index level largecap or smallcap or at the stocks with long enough history it has always aligned. The current observation, however, suggests that especially in the smallcap space you are seeing a huge dislocation which is something that has not really happened before.

Jigar Mistry, Co-founder, Buoyant Capital, says “if you look at the ownership spectrum of largecap versus smallcaps and look at the free float as an additional variable into this, very interesting data is shaping up. There are a few graphics running there but if you look at the free float ownership in the largecaps, FIIs are the predominant investors with almost 42% of the ownership in free float largecaps. But if you look at smallcaps, retail ends up owning 49%.” On Friday, largecaps were pretty quiet but that had been the story for the last few weeks. How are you analysing the construct of the market right now? See, it is an interesting time because if you look at India from a slightly longer term perspective, it looks like it is not just the fundamentals that are reasonably good but we will eventually end up attracting a lot of flows as well.

«Similarly MFIs have been ignored for long but MFIs follow a cycle so if you get the cycle right the upside can be big.So MFIs and mortgage or housing finances within NBFCs where we are currently investing,» says Viral Berawala, Director, Buoyant Capital. Have you started buying pharma yet because that too is showing sparks that perhaps worst should be over, especially for generic exporters, pricing pressure and big demand for medicine in US.So there are sort of two buckets in which we have divided pharma. So there will be negative impact of lower chemical prices, especially the API prices have gone down. So within pharma which are very API driven is something we are not looking at but pharma where the exposure is more towards US generic, their prices have stabilised. The price erosion, normally what we are seeing this year, we are seeing much lesser price erosion. So within pharma, we like companies which are exposed more towards US generic and avoiding where the exposure is more towards APIs. In the auto, auto ancillary space, where all have you been looking for value? Anything which got you occupied there? So within auto, we are not into auto but especially auto ancillaries. So a couple of factors have played out in auto ancillary. Some of the auto ancillaries who are supplying to Europe, the cost of Europe auto ancillary manufacturers have gone down a lot, both tier-1 and tier-2. And that is where some of our, let us say forging companies have done very well. So within auto, that is the space we like. We participated a bit in the two wheelers but now we think the valuations are full on the two wheeler side. So auto ancillary, especially where there is some exposure to Europe, is we think a good place to be. Part of

Tighter cost control, coupled with booming revenues, will help large European banks beat their 2021 targets, but Fitch is warning that major lenders may face a tougher test next year.