Women On Dalal Street: How Anita Gandhi blazed a trail for women in the world of investments

As a child, Anita Gandhi found the stock market daunting. A good memory and her ability to crunch numbers, however, helped her overcome those fears. By the time she was a teenager, Gandhi was wondering why the world of investing and markets did not feature more women.

Women, Gandhi saw, did not like heavy lifting in the literal sense but excelled at it in the metaphorical sense. Indeed, when it came to investing, she believed that women had the traits needed for success — patience and self-study — in abundance. There is no grunt work or the endless, repetitive activity of the factory floor; all it takes is acumen.

Gandhi’s acumen has taken her far over the course of a career that is now into its fourth decade. Along the way, she passed the CA and ICWAI exams with flying colours, and mastered the art of analysing annual reports and cash flows.

Stellar career
Gandhi joined Arihant Capital Markets Ltd in 2002 to launch its institutional business and is now a whole-time director at the broking house. She plunged into her work, trying to ensure that investments under her watch always earned money.

By the time she joined Arihant Capital, Gandhi was already a veteran, having spent 14 years in the industry and in financial markets. A passion for research, minutely examining numbers and business models, gave her an edge when she interacted with heads of treasury, fund managers and investment heads at insurance companies.

Over the years, Gandhi built up an impressive portfolio of 75 high-profile clients, including banks, insurance firms and mutual funds.  She began building that network of clients in the days when physical copies of contracts had to be submitted to the domestic institutional offices before 4.30 pm every day.

Under her leadership, the institutional business’s annual turnover grew from zero to around Rs 6,000 crore. And Arihant, where Gandhi had launched the institutional business from a small rented office in Borivali, rather than from South Mumbai like all other institutional brokers, soon moved to a posh, 4,500 square feet space at Solitaire Corporate Park on the Andheri-Kurla road.

"All along, I kept on talking to clients, helping them understand the real dynamics. That helped me carve out a niche for myself in this male-dominated broking industry," says Gandhi.

Later, Gandhi also played a vital role in establishing a mutual fund distribution desk for Arihant. Her efforts saw Arihant feature as one of Forbes’ Best Under a Billion companies.

Investment philosophy

Gandhi spends a lot of time researching and understanding companies, their businesses, tracking earnings and sales, examining whether funds are invested in core activities or backward-forward integration, and so on.

"With the advancement of technology, a lot of data is easily available, such as company annual reports and quarterly results, which help understand the basic structure of a company," she explains.

Keeping a tab on cash flows is essential as companies that divert funds to unrelated businesses may not always succeed, says Gandhi.

She has always stressed on the need to have a balanced portfolio for a steady flow of income. Investing in high-quality debt, Gandhi says, ensures strong asset diversification. A 40-60 percent allocation to good-quality debt papers is needed during volatile times, such as the current period, when Covid has held the world hostage, she says.

Identifying durable businesses

During the Dotcom boom, Gandhi picked strong IT stocks such as Infosys and Wipro. Many investors were betting on Y2K during the dotcom bubble in 2000. Most IT companies were trading at PEs of 100 and couldn’t envisage that earnings would stop growing.

Gandhi kept close tabs on product innovations, shifts in sales and behavioural trends to gauge future earnings growth and saw demand plateauing for some of the technology companies.

A few years later, she identified resilient commodity stocks that stayed the course when most commodities fell by the wayside after the Lehman collapse. Likewise, she picked the winners among infrastructure stocks during the infra boom-bust.

She had advised clients to buy shares of Trent, Infosys, Aarti Industries, Natco Pharmaceuticals, Tata Elxsi, and Tata Chemicals at a very early stage, helping them garner rich returns.

In 2006-2007 many infrastructure firms started getting skyrocketing valuations based on their order books alone, as most investors ignored cash flows. Gandhi realised the firms could not simply keep borrowing without generating sufficient cash flows and cautioned her clients to avoid running after such stocks.

The infrastructure companies borrowed aggressively and many of those loans turned into non-performing assets of banks, leading to the crisis that has been ongoing in recent years. By understanding the business and the cycles, Gandhi was able to dissuade her clients from investing in banks that had large NPAs.

In 2007-2008, there was a big rally in the power sector as well. Most investors ignored the fact that even though power plants needed investments of Rs 5 crore per MW, they offered only single-digit, regulated returns. Gandhi advised her clients to stay away from high-priced power stocks and IPOs as the sector offers limited profits.

She was also able to save her clients from the real estate bubble of 2007-2008. Gandhi warned that DLF and other realty firms could not sustain their high valuations as they would not be able to make similar profits over the next five years as land acquisition costs had risen while inventory would pile up.

Companies that change in sync with demand requirements can sustain their profitability, says Gandhi, adding that it is imperative to continuously spend on research and development to ensure the right product is offered to the end consumer. Managements must be cost conscious and there should always be a focus on enhancing the company’s margins, she adds.

Gandhi believes managements that are ethical, focussed on the core business and adaptive generally do well. Covid-19 has changed demand, supply and operating dynamics for many firms and firms that adapt swiftly can be winners, she says.

Advice for women

Women need to be keen to make money and need better deals, better pay, etc. like men, says Gandhi. Women also need to hone their investment skills, she said, adding that there has to be passion and urge to make money out of knowledge-based investments.

She advises women to look at the qualities of legendary investors such as Warren Buffet and Charlie Munger and try to emulate them.

One thing Gandhi believes women should do is start investing early. She feels they should defer big spends on clothes and cosmetics and use that money to invest in good companies instead. The profits from these investments will enable them to buy these luxuries later, she points out.

Santanu Chakraborty  is a journalist who has been writing on the Indian equity and debt markets for the past 12 years.