Nippon India MF ends 2024 with over 80% of equity AuM in 1stor 2nd quartile – a robust outcome of unrelenting focus on in-house research and bottom-up stock picking without going to any extremes on styles and factors.
Cyclical slowdown driven earnings reset amidst high valuations has caused this market correction with external factors driving the currency being an added, though not main factor. Pickup in revenue growth is key to getting out of this slump, even if margins follow later. Sailesh believes it might take a quarter or two for us to see material growth in revenues.
He believes several large caps are now available at reasonable valuations – large caps may lead the next leg of the rally even as mid and small caps perhaps take some more time to correct to reasonable valuations.
Every bull phase has different leaders with different dominant narratives. Sailesh expects forgotten bluechips to lead the next leg up. These are stocks that have gone largely sideway over the last 3-4 years, are excellent quality franchises and are now available at reasonable valuations. Large lenders, select QSRs and select consumer discretionaries are part of this shopping list for Sailesh.
He acknowledges that large private banks may see some NIM compression in 2025 as a rate cut cycle begins – but argues that they are now available at such attractive valuations that they can become healthy compounders for several years if bought at these levels.
Nippon India MF’s multicap and large cap funds – both managed by Sailesh – continue to maintain top quartile medium and long term performance track records, with the multicap fund topping the league table on a 3 yr basis.