13-14% market returns possible with GDP and efficiency gains for next 5 years: Sandip Sabharwal
«So, at some stage you come to a level where returns obviously get muted. So, you have to buy some of these stocks whoever wants to buy on bad news like for example Amber did not do well when the entire AC market was in doldrums,» says Sandip Sabharwal, asksandipsabharwal.com.
I think you mentioned last week that these EMS stocks they look good, now the point is that I know anything above 50 PE Sandip Sabharwal will be the first one to come out and say mehnga hai, valuations are stretched. Why are you not bearish on these stocks because the PE multiples I think are 50 plus and the margins are 6-7%, that is not your style of investment.
Sandip Sabharwal: I am not buying these stocks but the whole point is that when the question was asked whether these companies will do well over the long term the only thing I see is that they are getting so much traction of growth by so many tie-ups and benefiting because of PLI, etc, and the entire PLI business because a few companies get selected and then it is very tough for new companies to come in so these people are getting sort of a moat because of government policies not because of what they are actually doing.
So, I think that is the reason some of them could actually do well over the long term, that is what I said. So I am not very comfortable buying them at these valuations and the kind of margins at which they operate, but the fact of the matter is that some of them could actually do well long term.
I mean I was just discussing this Kunal that optically look at these
