Cyclical downturn expected to soften market valuations: Abhay Agarwal
«Some bit of cyclical downturn is expected, which is what we are going through. I think it will reflect in terms of softening of valuations of the market,» says Abhay Agarwal, Piper Serica.
What is your sense, is it going to be a bit of a soft Diwali for us?
Abhay Agarwal: Well, it is looking like we saw some of this trend starting to come up. Low consumption, weak consumption, the Diwali stocking that typically used to take place with the retailers and distributors of products that focus on consumer discretionary demand like paints, tiles, home improvement, autos especially, there was a very weak offtake.
There was already a lot of channel inventory that was not getting absorbed. So, there was already nervousness that the consumption figure will be lower than earlier years and as we come closer to Diwali, we are not seeing any significant pickup in demand.
And also the earnings numbers that we have seen so far come out are not very encouraging and are kind of pointing towards a cyclical downturn. It is not a structural downturn, but we have had a one-way rally in GDP growth, economic growth since COVID.
Some bit of cyclical downturn is expected, which is what we are going through. I think it will reflect in terms of softening of valuations of the market.
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