Sunday, December 21, 2008

If not now, when? If not at these, then at what prices?

The 13th Wealth Creation Study organized by Motilal Oswal was held on the 19th December. Among those present included- Rakesh Jhunjhunwala, Raamdeo Agrawal, Sanjoy Bhattacharya and Ramesh Damani. The key speakers exuded great confidence [read the full transcript] in the India Growth story, which to my mind remains pretty much intact irrespective of what the stock markets makes us believe.

Consider the following:

- With a real GDP growth of around 5% over the next decade (a pessimistic estimate) and an inflation of around 5% we are looking at Nominal GDP growing at the rate of "atleast" 10%, which will also reflect in Corporate India's earnings.

- We are still way behind in terms of our physical infrastructure, be it Roads & Highways, Ports, Airports, Hospitals, etc. , when compared some of the other developing nations like CHina, Korea, etc. The investment boom in India has only begun and right now we are only seeing a temporary slowdown.

- Unlike many economies in the West, we will have no bank/insurance company going down under, we have no housing crisis (except for within the developers, and well, they deserve it!), we have no over-leveraged consumers that live beyond their means, we have a corporate sector that is leveraged within a comfortable range whichever one looks at them - Debt to Equity or Interest Coverage, we have a huge middle class building up that will lead to massive explosion in demand for consumer goods over the next decade, the list is really endless...


Growth will not be a problem so far as India as an investment destination is concerned, its the price that one pays for the investment that will determine returns over the next decade. And it is this factor that is now in the favour of the long term investor...

Dr. Ajay Shah has similar views [link]

I agree with him 100% on the fact that 2009 will indeed be a stock pickers market. It's time to work @ 150% capacity utilization :)

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