Indian companies are being increasingly accused of being too conservative—protecting high return ratios at the cost of long-term growth by underinvesting in innovation, R&D or new brands. But Sunil Singhania, founder of Abakkus Asset Manager, said investors are as much to blame for that mindset.
“I would say the companies are to blame but the bigger blame should be to investors like us,” Singhania said in a conversation on the Wealth Formula podcast with N Mahalakshmi. “We are a new economy and equity investing has only picked up in the last 30–40 years. By nature we are a little bit traditional and therefore we want to take less risks. That is what has got imbibed in the entire ecosystem and that is what we keep on pushing the companies also.”
He pointed to India’s IT giants—Infosys, Wipro, TCS, HCL—as examples of firms that hoarded cash or returned it via buybacks instead of betting on areas like AI earlier. Pharma too, he said, has seen companies punished by markets for spending heavily on R&D.
WATCH INTERVIEW HERE: Sunil Singhania on Finding Under-Researched Stocks, Bold Calls, GST & Tariff Impact
That phase, Singhania argued, may now be changing as new-age companies list without profits but with a growth-first mindset. “It has been a phase where the near-term profitability return ratios were more important … but I think now slowly the realization is coming.”
For consumer and IT firms in particular, Singhania said managements will eventually have to choose growth over comfort. “In an economy which is growing real terms six and a half seven and nominal terms 10–11, are you going to be happy with two percent growth all your life? The management themselves will introspect … whether it is through acquisitions, expanding product portfolios or going into new-age businesses, they will have to. Otherwise, the value of the shareholders will keep on getting lower and lower.”
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