Kashyap Javeri of Emkay Investment Managers is quite bullish on digitisation, automation and AI themes. "Global tech spends are likely to grow to 5 percent of revenues by 2030 (vs 3 percent today) and of this >50-60 percent will be spent on digitization and automation," he said.
With the expected fall in interest rate cut, the exposure to the real estate sector can also happen through building material space like piping, ceramics, plywood and some other manufacturing sectors, said the fund manager and head of research with more than a decade of experience in company and sector research.
According to Kashyap, in lower interest rates scenarios usually sectors like NBFCs, real estate and debt-heavy companies benefit.
Is the growth recovery broadening out led by rural recovery & increasing private capex?
While the April-June quarter numbers were subdued for earnings (Nifty 50 EBIDTA and PAT growth of 5 percent and 4 percent respectively), it was also impacted by elections (almost 2 months long) as well as a heatwave. Due to excessive rains in certain geographies, July-September quarter numbers will also be impacted. However, with a 5-6 percent surplus monsoon and strong kharif sowing season, one can expect the rural economy to make a strong comeback this year.
Overall, within discretionary spending, we have already started hearing stronger growth in rural vis-à-vis urban areas. Driven by expectations on strong rural demand, the private capex is also not ready to be left behind. If you look at recent RBI data, the overall capex funding sanctions by banks at Rs 5.65 lakh crore is the highest ever since the FY10 peak. If you look at the capex done by BSE500 companies involved in manufacturing, they spent more than Rs 3.50 lakh crore on capex in FY24. We believe that as India strives to become a manufacturing hub not only for its consumption but for the world too, this capex story will only intensify.
Do you think the RBI will go for interest rate cut only if the inflation sustains below 4 percent, or growth drops below 6 percent?
While earlier the RBI was reluctant to discuss any leniency in the monetary policy, at least now a rate cut can be part of discussions. As you know, in the previous monetary policy committee meeting, two of the deputy governors are now in favour of a rate cut. We believe that EME’s (emerging market economies) monetary policies are not always totally independent and partially depend on what the Fed does. Now that the Fed has cut rates by 50bp and opened the path for further rate cuts this year itself, RBI has more legroom.
Do you advise real estate space for the portfolio?
We do not have any direct exposure to real estate stocks in our strategies at this point. However, if the rate cut cycle turns benevolent and economic growth continues to be strong, housing is one discretionary spend which will be an important part of the Indian wallet. The exposure to the real estate sector can also happen through building material space like piping, ceramics, plywood and some other manufacturing sectors.
Have you changed your investment strategy with an interest rate cut?
Usually, we try to build portfolios which are independent of where the rates are moving, which is having companies which are low on debt or cash-rich and where demand is independent of money supply. However, in lower rates scenarios usually sectors like NBFCs, real estate and debt-heavy companies benefit.
Are you bullish on urbanisation and digitisation themes?
We are quite bullish on digitization, automation and AI themes. Globally companies are incrementally spending more money as % of revenue on automation and digitation. Global tech spends are likely to grow to 5 percent of revenues by 2030 (vs 3 percent today) and of this >50-60 percent will be spent on digitization and automation.
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