Latest news with #ManishSonthalia
Time of India
6 days ago
- Business
- Time of India
Mid and smallcap earnings to outshine Nifty 50 despite valuation concerns: Manish Sonthalia
"All in all, largecap would have minus one to plus one sort of a CC, constant currency, growth but the better numbers would likely be from the mid-tier players in the IT space. Again, on the IT side again, I would believe that most of the negatives are broadly in the price. If we were to take a next two-to-three-year point of view, these are basically buy on dips even for IT names," says Manish Sonthalia , Emkay Investment Managers . Well, so much to talk about in terms of the market momentum we have seen, you have earnings, you have some stock specific and sector specific action coming in. So, let us begin by talking about what the mood is like in the market right now because we have seen a serious range of consolidation recently. What is your take on the market? Do you believe that the kind of cool off we have seen could make for a good case on a buy on dip strategy sort of a thing or it is just a wait and watch momentum in the market right now? Manish Sonthalia: We have seen the markets rally one way from March onwards and we have seen the index rally up to 15%. And we are in the middle of the earning season. So, it is the nature of the markets that whenever you are in the earnings period, there is a lot of volatility. And because the markets have moved one way on the upside, there could be some selling that will come about in the earning season. But I would reckon that these are times to basically buy the declines that you are seeing. This is not a market where you are going to sell on the down tick, so that is what I understand. And it is supported by earnings, it is supported by macros, it is supported by global flows, all of that. So, I would believe that the market is a buy on dip. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Nissan Qashqai fırsatı Nissan TR Teklif Al Give us some sense that which sectors do you believe offer the best risk-reward at this point in time because we have just kickstarted the earning season, a bit of a disappointment coming in from the retail and the IT players. But any sector that you wish to flag off where you believe that the valuation, the growth outlook looks favourable and even the price points? Manish Sonthalia: Public sector banks, real estate, infrastructure, you will have capital market plays, consumption, discretionary consumption particularly even if the earnings do not come through this quarter, next quarter onwards you surely should be looking at some sort of an uptick in the consumption. So, these would be some of the plays I would believe would be outperforming the rest of the market this earning season. As far as the IT names are concerned, again it is not out of the ordinary TCS reported the numbers, pretty much in line adjusted for BSNL numbers. So, all in all, largecap would have minus one to plus one sort of a CC, constant currency, growth but the better numbers would likely be from the mid-tier players in the IT space. Again, on the IT side again, I would believe that most of the negatives are broadly in the price. If we were to take a next two-to-three-year point of view, these are basically buy on dips even for IT names. Live Events Last time we interacted, you were very positive on the entire insurance space, life as well as health insurance. Does that conviction continue? Manish Sonthalia: Absolutely. I would believe that on a sequential basis the health insurance names would see some sort of an uptick in terms of your profitability, the combined ratio would likely be better than what we have seen in the previous two-three quarters. And long-term trajectory in any case remains okay. And the valuations per se are very-very reasonable. Likewise, for even the life insurance players, even in the first quarter their growth was very-very decent. So again, out here life insurance has not seen too much of an action in terms of over the last two-three years. While we interact with the other market participants as well, they are always flagging off that concern with respect to the valuations, lower growth earnings, and what will eventually be the case with respect to the tariff. While it is good to note and it is good to hear from you that it is a buy on dips market as per you right now, but do not you think that there are some concerns for the markets of late or are you also pencilling in some of the risk factors or it is all good for the markets right now? Manish Sonthalia: Markets would have something to worry about at all points in time. We have never seen a market in my 30 years where they do not have anything to worry about, everything is hunky dory. So, having said that, you look at the anecdote as far as the valuations are concerned from the point of view of earnings. Fourth quarter number earnings was the best for the midcap and the smallcap space and that is where the maximum concern on valuations have been. So, while the Nifty 50 reported 2% YoY growth in the fourth quarter, operating profits were around 5% or 6%. The same number for, let us say, Nifty 50 next was around 27% growth. For, let us say, Nifty 150 midcap index, the earnings growth for fourth quart was 21%. For the smallcap 250 it was 20%. So, when the whole Nifty 50 is seeing a low single-digit sort of a growth, I mean the better growth numbers are coming in from the broader markets. Having said that, yes, historically the median valuations of Nifty 150 midcap was around, let us say, 30 times and today the index is valued at around 35 times, you will have to remove the outliers. You have very high allocations in some of the stocks which are trading at more than 100 PE. So, lopsidedness on some of the allocations, the index gives you a very skewed picture as far as the index PE multiples on the mid and smallcaps are concerned. But overall earnings trajectory for the mid and smallcaps are going to be much better even for this quarter. While the Nifty 50 earnings growth is likely to be in the range of 3% to 8%, I mean the midcap index projected earnings growth is going to be around 22-23%. And even for the smallcap index earnings protection is going to be around 10% to 15%. So, it is going to be better than the index per se and frontloaded dose of liquidity and cost of capital will only keep valuation slightly elevated and there is going to be a price inflation according to me because of the RBI actions and that would be supportive of the market as a whole. So, if one was to assume that markets will fall off a cliff, I would not think so. And in any case, markets do not remain in equilibrium, they undershoot or overshoot. This time around because of the earning support as well as the RBI actions, markets are more likely to overshoot rather than undershoot or stay in equilibrium. Also, give us your sense on some sector specific moves. Pharma is a space that you have liked for some time now, but the big overhang of the 200% tariff on pharma still continues. Does that change your stance on pharma? And do you believe that this 200% tariff could actually materialise on the space? Manish Sonthalia: No way. I mean, I would believe that first of all, you have a holiday on that tariff for the next one, one-and-a-half years and 200% tariffs in any case is not doable. Even after, let us say one, one-and-a-half years, you will have something coming up on that front. Generics is what supports the pharma industry in the US and if this is the amount of tariff, then obviously if there is a pass through of this 200% tariff, it is going to be extremely adverse for the healthcare sector as a whole for the US. But sticking with the tariff, everybody is waiting out for that final number with respect to the India-US tariff. But this time seems to be a little different with respect to the market reaction we have seen on April 2nd because from then till now with respect to the other geographies, Donald Trump has not made any big changes in terms to the numbers. Do you believe that if at all for Indian markets if we also come nearby to that 26% odd mark, it will be very well digested by the markets? Manish Sonthalia: No, I think 26% would be taken very adversely, 10 is already there. Any number between 10 and 15 would be positive for the markets. More than that this 500% tariffs because we import oil from Russia, I mean that is to be given more importance as to whether that is going to come or not come but otherwise markets are digesting today a number between 10% and 15%. If that be a case, then it would be a relief for the markets. Anything more than 15% in the vicinity of 20% or 26% would be negatively looked at by the market. What are you making of the tariff impact on the entire US macros? We have seen the bond yields that spiked up. The dollar index continues to be under pressure. Do you believe the tariffs are doing more harm than good to the US economy at present before they start playing out for the longer term? Manish Sonthalia: Absolutely. I mean, there is no doubt that ultimately the tariffs are going to be paid by American consumers give or take a bit here and there, that is about it, and it is going to be quite inflationary. And from the point of view of the fact is the repercussions on the US dollar, I would reckon it is headed on the downside and if that be the case, then it is going to be beneficial for emerging markets, India is a part of the emerging market and it would also tend to benefit from flows.
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Business Standard
04-06-2025
- Business
- Business Standard
Emkay bets Rs 1,000 cr on small and mid-caps with New Growth Engine Fund
Emkay Investment Managers on Wednesday launched the Emkay SMID Cap Growth Engine Fund, a portfolio that underscores growing investor appetite for India's small and mid-cap space, aiming to capture the next phase of India's economic expansion. Targeting a corpus of Rs 500–Rs 1,000 crore, the fund is being offered in both AIF and PMS formats, and is designed for investors seeking high-conviction exposure to small and mid-cap companies expected to drive the country's future growth story. So, what's the pitch? Why SMIDs now? EIML's new fund is based on a simple idea: India's growth story is no longer just about the giants. Smaller and mid-sized companies — especially those driven by innovation, digital expansion, capex, and consumption — are becoming the real engines of future wealth creation. And here's the kicker: SMID stocks have already delivered strong returns over the past 5 years, but EIML believes that the next 3-5 years could be even better, thanks to: Easing inflation Falling interest rates (which helps smaller businesses that rely on borrowing) Improving household incomes Supportive liquidity conditions Strong backing from FIIs and domestic mutual funds What makes this fund different? Name: Emkay SMID Cap Growth Engine Fund Structure: Available both as AIF (Alternative Investment Fund) and PMS (Portfolio Management Services) Target Corpus: ₹500–₹1,000 crore Strategy: Invests in listed small and mid-cap stocks using bottom-up stock picking Research Framework: The unique E-Qual Framework that scores companies on business strength and management quality Benchmark: S&P BSE 500 TRI Recommended Horizon: 2–3 years Fund Managers: Market veterans Manish Sonthalia and Kashyap Javeri Investment Objective: The product seeks to achieve long-term capital appreciation by investing primarily in small cap & mid cap securities. Description of types of Securities: Under this PMS and AIF product investments are made in equities and equity related instruments. A balanced and well-diversified equity portfolio is created based on fundamental research. Investment Approach: The strategy follows a bottom-up stock picking process "Small & Mid Cap (SMID) offers broader exposure to India's growth story through innovation, digitalisation, capex, and consumption, providing more opportunities for alpha generation compared to large caps. These sectors are likely to benefit from macro tailwinds such as easing inflation, declining interest rates, rising household income boosting consumption, and liquidity measures supporting market revival translating into higher growth. Given that SMID companies tend to rely more on borrowing for their operations and growth, their higher sensitivity to interest rate cycles positions them to revive and potentially outperform in an environment of easing retail inflation and declining rates," said the company in a statement. According to EIML, mid and small-cap companies are anticipated for positive growth over next 3-5 years, making them a good potential bet for investing. EIML also highlights that mid and small-cap stocks have delivered a robust return over the past five years. It further notes that the current macroeconomic conditions and supportive valuations present an attractive entry point for SMID investments, particularly following the recent market correction. Who is this fund ideal for? If you're an investor who: Is looking for higher alpha than large-cap funds Can tolerate moderate to high volatility Has a 2–3 year investment horizon Wants to diversify beyond blue-chip stocks Believes in India's structural growth potential — then this fund might be a smart addition to your portfolio. "As of March 2025, small-cap and mid-cap mutual funds (MFs) together constitute over 30% of total equity flows, a significant jump from 5% a year ago. The dual support from foreign institutional investors (FIIs) and mutual funds makes this rally much more sustainable. Strengthening flows into SMID segments suggest that select opportunities in small and mid-cap stocks could outperform over the medium term," said Manish Sonthalia, Director &; Chief Investment Officer, Emkay Investment Managers Limited. I
Time of India
03-06-2025
- Business
- Time of India
Emkay Investment Managers launches SMID Cap Growth Engine Fund
Emkay Investment Managers Limited (EIML) has announced the launch of the Emkay SMID Cap Growth Engine Fund . EIML aims to raise Rs 500 crore to Rs 1,000 crore from this latest fund during FY26. The product seeks to achieve long-term capital appreciation by investing primarily in small-cap and mid-cap securities. Under this PMS and AIF offering, investments are made in equities and equity-related instruments , with a balanced and well-diversified portfolio constructed based on fundamental research. Also Read | How a Rs 50,000 Monthly SIP for 20 years can grow to Rs 5 crore, explains Vijay Kedia Best MF to invest Looking for the best mutual funds to invest? Here are our recommendations. View Details » by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Neuvěřitelné: Kalkulačka okamžitě ukáže hodnotu vašeho domu [podívejte se na to]! tržní hodnota mého domu Kliknout zde Undo The strategy follows a bottom-up stock-picking approach, supported by extensive fundamental analysis, including an in-depth study of the business, management, and valuation. The fund will be benchmarked against the S&P BSE 500 TRI, and investors are advised to have an investment horizon of two to three years. It will be managed by Manish Sonthalia and Kashyap Javeri. Live Events Small & Mid Cap (SMID) investing offers broader exposure to India's growth story through innovation, digitalisation, capex, and consumption, providing more opportunities for alpha generation compared to large caps. These sectors are expected to benefit from macro tailwinds such as easing inflation, declining interest rates, rising household income, and liquidity measures, all of which support market revival and higher growth. Given that SMID companies often rely more on borrowings for operations and expansion, they are typically more sensitive to interest rate cycles, positioning them to recover faster and potentially outperform in an environment of moderating inflation and falling rates. According to EIML, mid- and small-cap companies are poised for positive growth over the next 3–5 years, making them a compelling investment opportunity. The firm also highlights that mid- and small-cap stocks have delivered robust returns over the past five years. Furthermore, EIML notes that the current macroeconomic environment and supportive valuations offer an attractive entry point for SMID investments—especially after the recent market correction. Also Read | Gold prices may fall 12-15% in next 2 months, warns Quant Mutual Fund As of March 2025, small-cap and mid-cap mutual funds (MFs) together account for over 30% of total equity flows, a sharp increase from just 5% a year ago. The dual support from foreign institutional investors (FIIs) and mutual funds makes this rally far more sustainable. Strengthening flows into SMID segments indicate that select opportunities in small- and mid-cap stocks could outperform over the medium term. 'SMID offers a compelling mix of growth potential, valuation comfort, and supportive macro trends, making it a strong candidate for investment. The fund follows a focused bottom-up stock-picking approach, backed by in-depth fundamental research and our proprietary E-Qual Framework—arguably the only framework of its kind in India—to objectively score management quality,' said Manish Sonthalia, Director & Chief Investment Officer, Emkay Investment Managers.
Time of India
19-05-2025
- Business
- Time of India
PSU theme to regain spotlight amid earnings strength: Manish Sonthalia
"According to me, the PSU theme will again come back into the limelight, you have a certain pockets of these and, of course, all the PSU names are up from their lows to say the least and that is where I stand as far the PSU pack," says Manish Sonthalia , Emkay Investment Managers . Also, help us with your take and the latest take rather on insurance pack because I know that you will not talk stocks, but if I can name some, then Star Health as a whole is up around 22% just in the week gone by. HDFC Life hitting its 52-week high and even SBI Life seems to be catching up. Very select counters when it comes to the life insurance space. Give us some sense that what is your current take on this particular segment as well as are you still holding your positive stance on this one? Manish Sonthalia: Yes, very positive on both the life insurance and the health insurance space particularly on account of valuations and bulk of the 80C impact because individuals are transitioning from an old regime to a new regime where there is not any deduction available for life insurance. So, given that most of the fear around the life insurance was that life insurance as a product was taken primarily because of tax breaks on 80C, I mean that has now come in the base and you are looking at pure protection as a mechanism for the life insurance companies. Valuations are very-very decent so to speak and broadly you could assume that on a long-term basis if you assume that life insurance or maybe even a health insurance is at the base case or the worst possible situation would be growing at around 15%. Now, whether a 15% growth into the future has got priced in in the current valuation, I would tend to defer. So, from that point of view, the established life insurance names plus the major health insurance names which you took, there is going to be price increase and you are looking at valuations in and around three-time price to book. Of course, there was pain on the underwriting segment and now that has got broadly priced in so to speak and on this current base most of the good health insurance companies, I mean I am alluding to the private ones and not the public sector ones, they would be working towards combined ratio of closer to 95-96% going into the future. Worst of the pessimism in the health insurance names according to me is again priced in. Live Events But let me put the spotlight on these narrative theme stocks. When you talk about the narrative theme, last year you did see that rally come about in the PSU counters be it the power space, be it defence, be it for that matter of fact railways as well, and if I could add to that list QSR space, also saw a lot of excitement when you talk over the last one, one-and-a-half years or so. Do you think they will make a comeback and should now people actually avoid or investors avoid looking at this entire narrative theme and look at select pockets where you have valuation comfort instead? Manish Sonthalia: The psu theme broadly according to me has again seen the worst. The PSU pack as a whole going forward is likely to outperform the markets. Already, a lot of pessimism has got built into it and the last six-nine months has been very damaging for the PSU space as a whole. It is coming back from the lows. Earnings growth broadly are intact for most of the well-known PSU and you have valuations which have got corrected. So, according to me, the PSU theme will again come back into the limelight, you have a certain pockets of these and, of course, all the PSU names are up from their lows to say the least and that is where I stand as far the PSU pack. I was never very bearish on PSU as a space, but now I have been more bullish because the valuations have come up and earnings growth is intact, dividend yields are very good. As far as the QSR space is concerned, this quarter numbers again is a mixed bag. Some of the names particularly the pizza ones have delivered good numbers, but valuations are exorbitant. The burger space, again the numbers have not come in as expected, but still keeping the faith as far as FY27 projections on some of these companies are concerned, the turnover guidance which they have given and even the operating leverage on the margin front should come through. Of course, you cannot really expect a runaway growth because the valuations are slightly on the elevated side, but these are very decent quality businesses where if the earning growth comes through, then broadly I expect that the second half of this year would be better than the first half of this year in the QSR space and broadly if I am bullish on consumption, then this is one space which would stand out, some of the names like your Jubilant or, let us say Zomato which are there in our portfolio, we tend to stick with these guys and believe that they could deliver broadly in the medium to long term. You have spoken about QSR. We have touched upon consumer discretionary. But what is your view when it comes to core FMCG because this time volume growth has been better than expected even though it is nominally better, but still it has been better than expected. Revenue expansion has happened in across the board. What is your take when it comes to core FMCG given that on the fundamental side, we are also expecting a very good monsoon this year and although urban demand has not picked up to the extent we would have liked it to be, it is still now picking up some ground when compared to rural demand. So, what is your take on FMCG now? Manish Sonthalia: The only concerning fact is the valuations vis-à-vis the growth. I mean you cannot expect more than a 10% to 12% sort of a revenue growth and, of course, companies would be vying for the volume growth per se because inflation is going to be very benign. So, it is a pick and choose where growth vis-à-vis valuation has to come into perspective. On a broad basis consumption would tend to get a lift broadly now that the IMD has predicted good monsoons even this year. Rural economy is coming out of the corner from the last two years downturn and these would help at the margin. On the headwind side in the FMCG names, it is going to be your valuations. There is nothing more to basically look into it, it is basically growth and valuations, it will be a pick and choose. ETMarkets WhatsApp channel )
Economic Times
19-05-2025
- Business
- Economic Times
Markets to stay rangebound near-term; big upside likely in H2: Manish Sonthalia
So, wherever there is valuation comfort and most of these names are available at let us say one-time price to book and a decent growth going forward and if you have let us say the bulk of the provisioning or most of the pain getting priced in, then again this is one space which looks quite interesting. "What is supporting the markets, firstly, the markets are very-very light. The retail participation is very anaemic so to speak. You have institutional buying which has come through both on the DII and the FII front. The earning season, Q4 has primarily been better than estimates both on the largecap side as well as the mid and the smallcap side," says Manish Sonthalia, Emkay Investment Managers. I remember the last time we connected on air, you were quite bullish on the markets and you were actually looking for some good opportunities. But now that Nifty has surpassed that level of 25,000, the broader markets are holding up well, tell us how are you looking at the markets right now and how much more headroom do you believe is there for the index to move up if at all? Manish Sonthalia: The big move in the markets is likely to come in the second half of the year. For the next month, month-and-a-half you broadly believe that the markets would be trading within a band of 24 to 26, in a range till at about the point in time when you have clarity on the tariffs, that would broadly be the construct as of now. What is supporting the markets, firstly, the markets are very-very light. The retail participation is very anaemic so to speak. You have institutional buying which has come through both on the DII and the FII front. The earning season, Q4 has primarily been better than estimates both on the largecap side as well as the mid and the smallcap side. There was a lot of apprehension that there is going to be degrowth in the mid and smallcap space, the quarter gone by, but I am afraid that that has not come true and the earnings for the mid and smallcaps have come in better than estimates, that is the main reason why you are seeing broadly buying in the broader markets per se and the flows on the monthly SIPs, etc, have pretty been decent. So, all in all, fundamentals will need to keep just getting justified in Q1 and Q2. Of course, we are looking at rate cuts and so on and so forth but broadly markets on an overall basis rangebound in a 10% band between 24 and 26. Like you said this earnings is one that is actually ruling the sentiment when you talk about the markets in next one to two quarters, we need to see that momentum actually sustain when you talk about the earnings. But are there any select pockets right now that are looking very attractive to you given the fact that yes, we did see the correction, but post that we have seen a very sharp rally, a stellar one at that when you talk about the markets? Are there any pockets right now that are still actually emitting that value that you can go ahead and look to invest in because I am sure a lot of FOMO effect has already kicked in. Manish Sonthalia: So, when the markets were at 22,000, it as a space was looking very-very well valued or very decently valued, very benign in terms of valuation given that now you have some sort of a clarity coming out of the major issues on tariffs with China and the chances of a US recession has come down from around 75% to something like a 40% probability of a recession. So, at the margin it would be outperforming in the last two-three months, that is one. Secondly, Operation Sindoor has given a lot of fillip to the defence names. I would primarily be going on where this additional 40,000 crores worth of orders are likely to come through. This is going to be broadly in the area of artillery, guns, missile programmes where electronics, etc, would be a part. So, these would be some of the areas which at the margin look pretty decent. Staples, we need to watch out for the second half of the year numbers when this whole consumption space looks good. BFSI, particularly insurance, health insurance, life insurance, of course, nothing much to read into the monthly life insurance numbers are very-very low, but on a valuation front from the next one- to two-year point of view again, this is one space looks good. Pharma has not got dented much, again it looks a good story for the next one to two years, particularly the CDMO space and that is where the entire focus would be currently according to us. Last time we interacted with you, you believe that the entire banking and financial space looked like it had more value to offer. Given the kind of numbers we have seen in quarter four, it has been a good quarter four coming in for banking and financials. Over the year as well, on year-to- date basis these are the top two sectors that have been gaining. Now, do you believe that there is still some value in this sector? In terms of the valuations, do you believe they are justified or do you believe that there is some more run-up left over here? Manish Sonthalia: So, ever since the second quarter of FY25 when the MFI issue came to light, of course, it was very clear that the next two to three quarters there is going to be elevated provisions, particularly in the MFI space and the retail space, that is getting manifested in terms of provisions that you are looking forward to in the midcap banking names, we got to watch out how this whole provisioning plays out. But the largecap names both in the public and private sector space are better poised at this given juncture. But at the same time, I would believe that there is definitely value emerging even in the MFI space because a lot of provisioning has already happened and particularly the stocks have also priced in most of the negative. So, wherever there is valuation comfort and most of these names are available at let us say one-time price to book and a decent growth going forward and if you have let us say the bulk of the provisioning or most of the pain getting priced in, then again this is one space which looks quite interesting.
