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ramv agrawal joining us on the conversation this morning chairman and co-founder of motilal oswal financial services Mr agrawal thank you so much for speaking with us here at NDTV profet absolute pleasure on uh what is turning out to be perhaps an exciting morning more optimistic than we would have thought at the start of this week hello yeah good morning so uh clearly uh things are uh kind of evenly balanced and there's a lot of uh hope that uh uh the FM is going to shower goodies for the middle class and women class that looks to be what even PM's expectation is so I would think that uh uh the commitment to uh what call vixit bhat that's coming out very clearly and uh one of the ways to increase the GDP growth rate from say 66 and half% to maybe 7 7 half% would be the uh giving some kind of incen to the middle class for consumption that looks to be the uh theme right now and do you think that that's the single most important perspective I'm just wondering on a budget morning and we're speaking half an hour before the budget what does a ramdev Agarwal have on his checklist to look at will you be looking at the kex figure the fiscal deficit figure what is the top point that you're looking at yeah yeah so I'm I I've noted down on three points one is the middle class what what what exactly they end up doing for the middle class and where FM has said clearly FM knows sorry PM knows what exactly uh is going to come so his wishes are around middle class and women class and poor so clearly we are going to see some bundle of uh measures out there whether it stands up to anything in the market or not that's one thing second is the commitment to 8% growth whatever it takes I mean uh it is for the leadership to say that uh uh we are committed to 8% year on year there will always be some cost here and there but uh but growth solves a lot of problems so how committed they are bureaucracy as well as the policy makers and Leadership to 8% thing third the credit flow I think one of the biggest thing which has hurt the economy in last 12 months in my limited understanding is the credit flow into the entire economy which has been which has come down from 15 15% to 10 12% if we remain at 10 11% do whatever I don't think we'll ever Touch 6 and half% that's my sense okay Mr agal good morning n here I love the I love the backdrop budget bullets maybe dodge any bullets that might come our way if if if they do but but here's my question sir uh one of the things that some of the panelists have stated today uh of course the UN unequivocal focus on growth and therefore if the FM and the government or the FM in her wisdom decides to deviate a little bit from the fiscal Glide path if that shows an intent to invest for growth or creating demand so if the next year's number is not 4.5 right uh and it says that it is being done to stimulate growth will the markets take it well or will the markets be disappointed I don't know about the market but I'll be very happy in the s that to me growth is Paramount and if you can do fiscal to me if you can do the growth and then consolidate fiscal fiscally that will be very good but I would not put fiscal consolidation as a priority over the growth because once growth comes even fiscal consolidation is possible because your tax revenues they get uh boosted okay that's one and something that I'll ask me what also so but just a follow-up question to that Mr agal um we want to do a lot of things there is very limited resources as well this time around we know that this year the revenue picture also has not looked that strong right so let's assume the fiscal path is maintained if you will um there is not I mean we haven't done enough capex and let's assume that number stays as is uh and doesn't really increase too much if you will and therefore misses the budgeted estimates too uh will that be a disappointment or will that be need of the are because revenues also have been lower I mean let's see the actual number what comes out my sense is that if they're able to boost the uh GDP growth and nominal GDP growth rate even if with a little higher inflation of about say 5% I think they will have enough revenue and uh so they will have enough resources if they want to do uh the if they want to maintain an actually increase nominally the cap uh capital expenditure because the best place where the capital uh capital expenditure will give rewards to the economy is going to be infrastructure and that only government can do so clearly the momentum which we are seeing in last few years uh where government is coming very aggressively onto the infrastructure side that momentum should be maintained and if anything whatever was the budgetary provision last year the next year should be somewhat higher at least 10 12% nominally uh so that it may remain percentage of GDP same but uh nominal value will be 8 10% higher the other other piece mral that from a Market's perspective what does it look to the last few years have seen this unequal Focus towards creating manufacturing assets giving PL schemes Etc that may well continue but if there are tax changes or other changes done in order to boost consumption all right and boost household income does it change the texture of the market in that the market starts rewarding consumption themes Staples what have you and is that fair too see n actually Market is looking for earnings growth and then from whichever sector it comes uh it is not necessary from the only consumption side the earnings growth should come if aggregate uh earnings growth which is now flattened from last year 1,000 rupees EPS for Nifty it has come to about 1,50 for the current year next year uh if it doesn't scale up to 10 12% from 1050 to say more like 1200 or 1150 I think Market will not be excited so it doesn't matter from which sector it comes whether it comes from infra side consumption side energy side you take your pck from which side it comes but aggregate my aggregate earnings growth should be more like I'm I'm speaking as a capital Market guy if my earnings growth next year looks to be my head of research revises the earnings growth projection for 20 5 26 to by 12 to 15% that would be the big day uh whether it comes by tax card whether it comes by earnings growth I per Top Line growth or margin expansion that is uh all but uh 12 to 15% earnings growth next year is uh is almost a must to hold the markets at 23,000 okay you know I'm just on earnings growth uh Mr agal want to get your view um have you if there's a scale of disappointment or optimism how are you feeling from what you've seen so far because um Q3 and second half was supposed to be the better picture being painted this is what we all heard in the end of Q2 what have been your thoughts when you've seen the earnings growth because at the end of the day budget will go one day Affair after that you will have Trump doing whatever Trump does but this is the core um number that we need to watch yeah so clearly last year thanks I mean if you see the economic survey uh Mr an Raman has uh when has gone about saying that the The Slowdown is not is structural it's seasonal in the sense that because of Elections the the capex the government capex slowed down at least in the first 9 months and that has led to whatever Q3 5.4% or some some some like that it's more it's not a structural slowdown in the economy it is more of a seasonal and that's why he is in one of the interviews I heard yesterday he said of course in the uh economic survey is written that their expectation about 6.3 to 6.8 but he was I mean he's the guy who is insightful today because he has written the whole thing so my sense is his expectation of about 7% for 25 26 I would I would think that uh he he would be on the right line of thinking and if that 7% comes with 4 and half 5% inflation I think we'll have good time I mean in the s that corporate earnings will pick up by more than 12 to 15% all right Mr agal I have one final question and that is not necessarily budget link but you could argue it's budget linked and I'm saying that let's assume the budget dishes out most things that you say if not all I would love to know at the start of 2025 how bullish bearish neutral is ramd agraval from from a 12 to 20 from a 12mon perspective I know you're very bullish over the long term just trying to think for the slightly shorter term which is 12 months yeah yeah so uh 12 months looks to be uh I mean I I would not be very bullish let me tell you I would be a little more uh on cautionary basis in the sense that I would expect about uh uh first half I would not be that bullish but second half I'll be very very bullish so on the whole for the year with little pain in the beginning I think we should do well and uh so I never so I would be cautiously optimistic for 25 26 particularly back ended um I want to get your view Mr Agarwal on what we've been seeing in terms of tariffs and while if I would look at look at it from three factors one what the government does one what you know corporate India does in terms of its earnings and its performance and then one is geopolitical and geopolitical factors of are going to be dominated by tariffs all the announcements this morning how did you look at it and is this an opportunity for India or a threat I think it will be both ways in the sense that I think it'll be more of an opportunity because the big big daddy in the global manufacturing is China and if China is being restricted clearly the tenor of Trump's tariff policy looks to be uh make uh Chinese Imports uneconomical so that the local manufacturing becomes a little more viable to that extent if there's not so much of tariff on Indian uh Imports probably it will be a huge Tailwind longer term Tailwind for Indian manufacturers to uh step of their effort and uh and uh and uh export a lot more to the US but that looks to be pretty what do you call uh simple uh simple analysis of what is going to come it's a very complex thing we have to play as it comes uh so uh let's not let's not speculate anything till final things have come okay fair enough we don't know yet I mean if tariffs for China good for India we don't know what's going to happen from the Indian perspective but in the context of this budget uh Mr agrawal what do you think we need to see would you wait to hear some clear policy Direction there yes so clearly as I said their ultimate North Star is the vixit bhat by 2047 and it is very well clearly L out that compounded growth of about 8% is required we are at about less than 6% right now as it so you have to you have to have very very clear policy guidelines and uh I mean where there is will there is a way and once Mr Modi has set his eyes on viit bhat and 8% growth uh all the all the forces uh and the policym will come together whether it is a deregulation of the businessman or ease of doing business Regulators coming little soft paddling on the on the operators you know so uh I mean the say like credit flow into the economy once you slow down the credit flow into the economy lot of other measures don't work so I think first they have to do the plumbing of uh increasing the credit flow into the economy and that I think at least economic survey talked about it let's see whether it comes or not or maybe it may not be in the budget but at least follow on to the budget there could be red cut there could be uh I I would expect a lot more monetary action than the fiscal action as we go forward in next one month just uh I know we've been saying one last for a while but this is really the last one I'm just wondering how are you looking at um the pain point in the markets right now and do you see FB first and then FB 7th after the monetary policy opportunity for a pivot here just just wanting to get what's in your head right now when you think about where Indian Equity is going yeah see broader market last year actual portfolios did very well like anywhere between 35 to 40 50% return on the back of the broad index doing just about 8 10% so clearly we have beaten the index last year this year I think index will come and beat us all so most likely it'll be very tough uh for most of the active managers to beat the broad index and hence there could be a churn from from medium small to large cap but that happens only when uh foreigners they start buying big time because they like to they love to buy uh large cap and large cap valuations have become very reasonable so uh let's see when the tide turns and it turns when you don't expect it so quite possible times are coming when uh things may change and and surprise us the pace at which it changes so I would think that there are lot a lot happening in Indian economy large caps are reasonably priced midium small is still slightly elevated and that uh IPO Market is kind of uh bringing down one by one because the offerings are uh there relentlessly so it's one of the hottest uh IPO Market I think one of the thing which I didn't say and I think it didn't come even in the economic survey is the flow of the risk Capital unprecedented flow of risk capital in the economy uh if it is harnessed well it can change the complete trajectory of economic growth and the pace at which we can develop so that is what is going to happen in next one or two years and I I would I would like to see how the FM uh FM helps that flow and uh uses that uh risk Capital flow into the economy very very creatively well let's let's hope um a lot of these wishes turn out to be true Mr gal thank you so much for joining today and giving us your thoughts really appreciate your time thanks
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