The phase of narratives driving stock prices is behind us. Only earnings – and healthy visibility of earnings – will work in 2025 says Bharath. And he is willing to pay a little more for stocks that exhibit this key trait.
He says rather than getting into a debate of which factor will lead in 2025 – whether quality or momentum or value – he would rather take advantage of the earnings dispersion happening and pick stocks on the right side of earnings growth.
Select stocks in the consumer discretionary space including EMS players, jewellery, QSR etc are where he will likely continue adding positions in while taking profits from some of the industrials that don’t have near term earnings visibility commensurate with current valuations.
Within financials, he prefers large banks (earnings visibility, reasonable valuations) over capital market plays like exchanges (current valuations supported more by narratives than earnings).
His dark horse sector pick for 2025 is specialty chemicals –especially companies that have completed their investment programs and have strong international relationships to quickly seize opportunities that may come their way from any turn of events in Europe or China.
2024 saw Sundaram Midcap Fund post another strong year of top quartile performance. The team aligned other funds with partial midcap mandates with the best ideas of its winning fund to ensure the fund house’s high conviction bets positively impact a wider set of funds.