Bhavin Shah on 4 themes to bet on in FY25

Bhavin Shah, Founder, Sameeksha Capital, says “if the economy continues to grow at such a strong pace, there will also be very good support for the small and midcap stocks. The opportunities to invest will be in largecap as well as mid and smallcaps.”

Shah further says: “There will be opportunities in the manufacturing space due to government capex. The chemical sector has not done well for a while and maybe near the bottom. At some point, there could be a little bit of recovery there from the low base and that could be something to look at. We continue to find opportunities in the broad financial space as well as the digital consumption themes.”

Let us start with the market setup. Many queues per se are lined up. Yes, there is an election and a budget but a large part of the Street is saying that it is pretty much factored in. You know which government is going to come to power. Budget is not expected to be a big bang and earnings will continue in the same breath. What do you think will drive the markets to fresh highs? Or do you think we have made the peak for the year?

Bhavin Shah: The fact that the economy is on a strong footing and growth momentum is pretty robust and presuming that the current government comes back to power, they seem to have got the plans already in place to keep the momentum going. That would support another year of reasonably good earnings growth and that should be supportive of the market.


Unlock Leadership Excellence with a Range of CXO Courses

Offering College Course Website
Indian School of Business ISB Chief Digital Officer Visit
Indian School of Business ISB Chief Technology Officer Visit
IIM Lucknow IIML Chief Executive Officer Programme Visit

Which side are you tilting towards in the largecaps vs midcaps debate? Is this going to be the year of largecaps or is there always going to be a bigger beta when it comes to the smallcap and midcaps?

Bhavin Shah: When a real decoupling of the largecaps versus smallcaps and midcaps happens, it could be because of some fundamental reason, a slowdown in earnings or the fact that there have been a lot of companies without strong fundamentals that have run up in the smallcap index. All that could lead to a meaningful deviation between the performance of the two.

Just because the smallcaps and midcaps have done so well last year I do not think it is a sufficient condition for the difference in the performance going forward between the two.If the economy continues to grow at such a strong pace, there will also be very good support for the small and midcap stocks in terms of the companies as well and that index can also find some reason to rise further along with the largecaps. So, not really trying to differentiate significantly between the two. I think the opportunities to invest, at least for us, are in both spaces.

What are those top sectors or themes that you think will outperform this year?

Bhavin Shah: The focus on investment-led growth, which is a big part of the government’s focus, probably continues and the investments in a range of sectors and incentives to create manufacturing capacity domestically continues. So there will be some opportunities because people will now look at more of a five-year visibility in terms of the plans for new investments and new capacities being built. So that would be one area to look at.

I think the chemical sector has not done well for a while and maybe near the bottom. At some point, there could be a little bit of recovery there from the low base and that could be something to look at. We continue to find opportunities in the broad financial space and within that, it will be some selective banks, NBFCs as well as wealth management and life insurance companies. So, across the board, we continue to find opportunities in that space and then it will really be across some of the digital consumption space also which will remain interesting for us.

Harry Byrne

Related post