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Indian economy is in for a couple of good years of earnings growth: Saurabh Mukherjea, Marcellus Investment

Mukherjea feels that the Indian economy is recovering nicely and the cost of credit in India continues to remain very low. Though the global economic conditions were a little choppy six months ago, but they're becoming fairly benign again.

August 12, 2022 / 02:55 PM IST
 
 
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The earnings season in India has reached its fag end with most of the important names having declared their earnings for the quarter ended June 2022. The earnings have more or less met the expectations of the experts. But, does this further add to the optimism about the India growth story? Well, Saurabh Mukherjea, Founder, Marcellus Investment Managers, was always optimistic about India. In an exclusive interaction with CNBC-TV18, he said that, “we were optimistic six months ago, we were optimistic before the earnings season and we are optimistic after the earnings season as well”.

Mukherjea feels that the Indian economy is recovering nicely and the cost of credit in India continues to remain very low. Though the global economic conditions were a little choppy six months ago, but they're becoming fairly benign again. “Given that we're in the early stages of an economic recovery, with a cost of credit which is low, with consumer confidence high and with formal sector job creation rolling away, we should be in for a couple of good years for earnings growth and a couple of good years of economic growth for India,” he said.

During the months of February and March, many strategists and economists voiced their views that one shouldn't invest in stock markets now because of Russia-Ukraine crisis, Chinese uncertainties related to COVID induced lockdowns and other things. Mukherjea rubbed away these talks as illogical because according to him if an investor is investing in businesses which are doing well, is investing in an economy which is doing well, he will definitely make money. “We continue to hold that point of view that this whole nonsense about global uncertainty should not be a factor. Focus on good companies, focus on strong economies and you should be all right”, he said.

When asked about his favourites among the sectors, Mukherjea said that he does not believe in the philosophy that a particular sector will do well or won’t do well. According to him, Indian companies that are knowledge intensive, science oriented and high skill oriented are gaining large room for growth in the wake of uncertainties related to China.

He feels that over the last four-five years China seems to be an economy which is in some sort of slow implosion. Every year things seem to get worse with the way the politics is unfolding, the way they are going after luminaries like Jack Ma and the way the real estate sector is blowing up, the world is seeing this sort of this Chinese implosion rumbles on and which auger well for Indian companies.

“Why china is becoming like this is quite mystifying because from 1985 to 2015 they were a juggernaut and basically since 2015 every year things seem to be getting worse in China but it's clearly giving the companies like Alkyl Amines and GMM Pfaudler a massive benefit”.

According to Mukherjea hammering of low income group after multiple waves of COVID-19, lack of blue-collar job creation in the country and its impact are to blamed for slow-down in demand and FMCG volume growth conking off.

However, “it looks like the worst of that phenomenon is behind us and the FMCG volume growth has found a degree of zest again. But you know, we're not nowhere near the sort of halcyon days of 2011-12-13 where FMCG would post an 11-13 percent volume growth. We are focused on identifying suppliers to the FMCG companies and have a strong R&D engine, who have strong pricing power and are able to drive an innovation pipeline which results in the FMCG buying more and more from these companies,” he said.

Disclaimer: The views and investment tips of investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Gaurav Sharma
first published: Aug 12, 2022 02:54 pm

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