Madanagopal Ramu on 3 themes to play for attractive risk-reward on a 2-3-year basis

economictimes.indiatimes.com:

Madanagopal Ramu, Head of Equities, Sundaram Alternate Assets, says: “One theme is the India growth story and financial inclusiveness and one can look at NBFCs, which are lending for small ticket loans, operating on a regional basis where the banks find it very difficult to come through. There are many small ticket financiers in the NBFC space or even small even small financial banks you can pay attention to. We find good opportunities here where people can make money. The second sector is manufacturing. Third is the consumer discretionary. Consumer discretionaries got impacted last year due to the noise around inflation. But we did not really see too much impact in consumption. ”

I would like to understand which side of the debate do you stand for? One side is saying midcaps and smallcaps are on steroids and it’s time to be careful. Others are saying that midcaps and small caps actually represent the India story and the numbers are supporting the up move. The valuations may have got a bit healthy but flows are also coming here, so it is not alarming yet.That is a very interesting question that you are asking.

Purely from an earnings growth perspective, mid and smallcaps is always an attractive space to be but you need to be very selective. Let me be very clear about it. It is not like you find 100 stocks in mid and smallcaps which can keep growing on a sustainable basis.