Nilesh Shah of Envision Capital states that consumer demand in India continues to grow, although there are shifts in consumption patterns. Certain categories have matured, while new ones are emerging, driven by India’s aspirational nature. He emphasizes the importance of investors identifying emerging opportunities within these changing patterns.
In a discussion with ET Now, Shah reflects on the positive year for wealth creation, noting that India’s wealth effect amounts to $10-12 trillion. With this wealth effect, Shah argues that consumption cannot remain permanently down. Instead, he attributes the perception of decreased consumption to focusing on a few large listed companies, ignoring the growth in other areas. He highlights the disruption caused by new entrants challenging established players like HUL and D-Mart, leading to changes in growth dynamics.
Shah acknowledges the challenges posed by inflation and stagnating income growth, particularly affecting the lower segments of the market. He calls for accelerated job creation, increased private capital expenditure, and reforms to foster a business-friendly environment. He stresses the necessity of upskilling to achieve broad-based wage growth and increased per capita incomes.
Regarding investment choices, Shah suggests that those seeking straightforward market options should consider Nifty, which has historically delivered returns higher than bank fixed deposits. Beyond the Nifty, he advises investors to identify top-performing stocks within the index and explore other promising stocks outside of it.
When asked about specific stocks, Shah mentions holding HDFC AMC and Angel One due to the promising digital shift in investments. He has recently invested in renewable sectors, particularly solar and wind EPC companies, and highlights a preference for assessing IPOs before participating. He confirms that his firm continues to hold positions in Hitachi and IDFC First Bank.
Discussing IT services, Shah points out that large IT companies are now mature, growing at a modest 3-4%. However, he sees potential in smaller companies that assist enterprises in adopting AI and big data analytics.
Lastly, Shah agrees that financials remain a promising sector, along with interest in the Contract Development and Manufacturing Organization (CDMO) within pharmaceuticals and the luxury real estate market. He notes the potential for financials to offer compelling opportunities if market conditions and valuations align. Shah advises investors to assume vested interests and conduct their own due diligence before investing in the discussed companies.
