investment themes: Want to stay ahead of the curve? Bet on these 3 themes: Aishvarya Dadheech
I remember a very good call of yours was in the luggage space when the opening up theme was happening. Talk to us about any new calls which you may have taken that are not exactly stocks but themes which the market otherwise may be ignoring.
We always try to stay ahead of the curve and the market is really not excited about IT as a space. There are a lot of concerns on global recession and possibly the slowdown in US and Europe which is a large part of the Indian IT services businesses.
That is why we have seen that the majority of those IT companies have seen their valuation go down by 25% to 35% in the last year-and-a-half. I am not saying that we are completely out of the woods, Uncertainty is high, volatility on the operation and GDP growth in those developed countries are at high risk but I also strongly believe that that is providing us an opportunity in those IT companies at this level.
So from a two- to three-year perspective, we are increasing our allocation to IT services. That is one theme which we are playing through. We believe a lot of those midcap IT growth could be higher than what the Street is estimating over the next two to three years and valuations are really attractive.
Another thing which we are getting in our portfolio over the last couple of months is manufacturing. We are buying a lot of businesses which are basically a play on not only China plus one but also Europe plus one or a play on PLI schemes and things like that. There are a lot of CRAM plays which we believe are trading at a valuation between 15 and 20-25 times where they have done a good amount of capex that will possibly start reflecting into numbers over the next couple of years. These are available at even less than one time.
These are the sectors which we are particularly excited about.
Last but not the least, one sector which we have been very positive about has been auto and now we are shifting more from OEM to auto ancillaries. There is so much negative noise about Europe that things are getting very scary and a lot of those auto players which have an exposure to that particular region are trading at very attractive valuations.
We believe that flow of valuations will happen from OEMs to the auto ancillaries and that is why we are adding portfolios in smallcaps in auto ancillary space in our portfolio. These are certain sectors which we believe can really show robust earnings growth in coming years and possibly because of attractive valuations, they could be great alpha generating opportunities like what we did in luggage or possibly in opalware or even in exhibition in the last two-three years.
