Moneycontrol
Jun 09, 2017 03:49 PM IST | Source: CNBC-TV18

While stock picking look at Balance sheets & cash flows besides earnings: Kotak MF

Stock picking depends on balance sheet and cash flows, and not only earnings growth, says Pankaj Tibrewal, Senior VP & Equity Fund Manager, Kotak Mutual Fund.

Pankaj Tibrewal, Senior VP & Equity Fund Manager, Kotak Mutual Fund is of the belief that although the valuations in the smallcaps and midcaps in the near-term are much above the long-term averages and a correction could be warranted but from 3-5 years perspective, the space looks very attractive.

There are many companies in this group that have the potential to scale up in a span of 3-5 years, he says. Moreover, market is not bothered whether it is a smallcap, midcap or a micro-cap, it only looks at the predictability of earnings, the earnings potential of the company and management's ability scale up and the ability of the company to grow in size.

The house also therefore, select companies based on answers to the above question instead of segregating them as midcaps, smallcaps etc. Stock picking depends on balance sheet and cash flows and not only earnings growth, says Tibrewal. Risk management is also important, he adds.

In the interview he also shares the rationale for picking stocks for their funds and justification for holding companies like V Guard and Whirlpool etc.

The Kotak Emerging Equity Fund that he manages has seen a return of 35.5 percent over the last 3 years versus benchmark returns at 26 percent.

For the entire discussion, watch video

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