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Let's talk about the long term. Motilal Oswal's Annual Global Investor Summit is underway in Mumbai. Whose day is today. This is considered one of the biggest conferences in the market or you can also call it the biggest conference. Big investors and corporates of the world participate in it. Please show it to Ramdev ji once.
At least it should be visible to people. Ah, Ramdev Agarwal is joining us now from the conference. To talk about it. Chairman of Motilal Oswal Financial Services, Ramdev ji, good morning, how is the conference going? Is the turnout the same as you normally see because the Indian market has stopped giving returns, so the turnout has also reduced a bit, right, no, it is fully crowded, fully, I mean, there are 200 corporates, 1200 participants, 16000 meetings, so it is all full, in fact, the excitement is very high.
Yesterday was day one very good, I think more on AI and technology, and you know those kind of talks were there. Yesterday it was very good, and today now a new flavor is there. Let's see, I mean, we have called all the growth companies, so let's see what's happening in the real growth. We will start with Tata Consumer and then many other companies are there, so we will see what's really happening in the economy.
And so it is, it is all fully packed. We, Ram ji, as you said, are quite happy. There are consumer companies. ITC is your conference, Varun Berezes is there. God is a consumer. Tata is a consumer. But most of these stocks have stopped giving returns. If you look at the past, ITC has now reached a multi-year low.
There was a lot of problem in God Consumer also. After leaving the CEO. What do you think here ? What's the problem? Or is this an opportunity in consumption space? No. There is always opportunity in consumption. The issue is what is the price you are paying in a stock. I think before 2015-17, there was so much craze for quality that it became quality at any price.
And so they are getting corrected from there. Well, in between, the growth also slowed down a bit for 5-7 years in consumer companies. So the valuation they gave was not justified due to growth. So now still because of high quality they should be a bit expensive but they are a bit too expensive. So, unless earnings growth catches up, I do n't think the current valuation will generate returns.
So these are very good companies. But the three things are good management, good business and good price, so good business , good management and good price are also very important to earn money. So that is what is missing in these companies. Ok. Ramdev ji, is this Paytm's presentation done or is it still left?
I am sure there will be many people asking questions and you are done, well it is done tomorrow. Ok, good. A lot of money has been made in this New Age. Yesterday people invested in many New Age stocks and you too have invested in many stocks. Now the valuations here are still good or you feel that you should book some profit here.
Look, the story is very long Anuj. Meaning this is a decade story. Meaning, this is happening quickly, if you look at the whole world, like in America, then the top 10 companies are all technology companies. So we do not have pure technology companies in India but there are technology using companies which are underlying businesses in which technology is being used and which are becoming internet based businesses.
So these businesses will be very big. But tomorrow is not going to happen tomorrow. Meaning that is also going to take five, 10, 15 years. So I think they are definitely expensive but there is very rapid growth. So it all depends on what your target is. Meaning you bought it for Rs 100 and the price went down to Rs 200.
If you have that much target then definitely you must book. But those who are long term holders and if let's say they are sitting in a good company , have bought it cheaply, I think they should sit. I think one should have the courage to digest the profits. The only way to digest long term profits is through which you can earn a lot of money.
And here is a place where if you buy at a good price and you are comfortable then you can sit for 5 years, 10 years because this story will become very big. Well Ramdev ji, you have seen the entire earning season, you are in this conference. You are listening to the managements. Listening to CEOs. Where is your strongest conviction this time that after looking at the numbers of the previous quarter, the expansion of the edgings is very due in the next two quarters?
Look, I belong to capital markets and financials, so I am feeling very good there because there is 15-17%-18% credit growth, capex boom is happening everywhere, so financials will benefit the most, meaning, wherever your capex is, but wherever the funding for it comes from, the banks will benefit, so such banks are in pristine condition and thanks to a few big banks not doing as you know, we are a little slow in growth.
Because of that, the valuation of the entire sector is low right now. So the sector is not a hot favourite but you look at the earnings growth, look at the quality of the books , look at the balance sheet. I think banks are in a very good situation and they will be a big beneficiary of the growth that will come in the economy in the future.
So a bank sounds good. The rest is all the energy transactions you have , capital goods, your AI infrastructure that is being built, compute is being built, defence is being built. So there is a lot of excitement. That is what I feel that this time the growth companies, I mean maybe my understanding is less but many companies are very expensive.
So you have to figure out where you can find good growth companies and good quality companies at a PE of 202-30 and that is less in large caps but a lot in medium and small caps and you must have seen that the earnings are also very high there, so there are a lot of choices in specific companies. Ok Ramdev Agarwal ji good morning Shreya speaking.
We have had sector specific discussions. Overall stock specifics also discussed. But my question is about mid caps and small caps. When the July MV data came, we saw a big trend towards small caps at 39% on month on month basis and you have always been constructive on small caps and mid caps. Sir, now this question was asked and you have always said one more thing that where the valuation is reasonable and there is a combination of both earnings growth, there should be more positive sentiment.
So, do small caps have both? Or are we compromising on valuation in the name of quality? What do you think? Now what about small cap, that is, all the companies beyond 250, there are 2000-2500 companies in small cap, in micro cap, many stories are very exciting and there are very reasonable prices also.
So you will have to do some deep research. In the sense that in large cap, if there are 100 companies or 150 companies, then your choice reduces a bit, but if you go down, there are a lot of choices, so it is good for you, but now you also have screeners, you have a lot of computational capability, you can use AI to research, you can analyze your cloud etc.
very well. So I think it is a matter of finding the right company at the right price. So there are many good companies but you will have to search for what you can get at the right price. So, but I feel that as the market progresses, as the economic growth will pick up, new companies will come from the bottom, which will bring growth and you will also get reasonable valuation.
We Ramdev ji, you made a lot of money in You Know Autos. You were once associated with Hero Honda. This time there is also great momentum in autos. After the GST cut, you had talked about how great the volume growth is. And this time the company also maintained the margin which was a big positive surprise.
But surprisingly I am not seeing auto companies in your conference, why ever ? Maybe he might have called me but he might not have come. You know they are doing so well that they might not have time to come here. So sometimes what happens is that this is the right argument. Yes, on time. Yes, so many times what happens is that what is there in C, there are 200 companies above, in that there are many auto companies, but in the 15 tracks which are the main track, CO track, the CEOs do not have time, they are very busy, but many people from the IR department or CFO of the company have come.
Hmm. [sound of clearing throat] Okay, one last question. Yesterday I was talking to the management at Dictionaries Tech. We came to CNBC residence. How much power do you now have in this EMS story from the sidelines of your conference? Because many people believe that how long will rerating take place at a margin of 3%?
So we were also in the CO track. So they gave guidance that their 3% margin will become 4.5%. So if you are telling about the turnover that brother, your turnover will increase from Rs 500 crore to Rs 180000 or Rs 2 lakh crore in 2030-31. So three times 3x to 3x, so we were talking about turnover and one and half times profit PAT, so we were talking about five times in five years.
I think he did it this way, that's how I understood it. So brother, he is quite big as per India but in global terms he is not that big. So I think management, I know, I was invested since 2007 eight. So they are very competent and understood but generally they are giving so much guidance. Meaning definitely they must be confident to reach there.
Well Ram Sir, I want to know one of your visions. A space which has emerged as the biggest in the last 5 years if you look at it. Look at Defence Space. Look at the whole company. Whether it is private or PSU. You should look at India's defence exposé. What is your view on this space considering the acceptance outside of our equipment, our defence equipment ?
This is perpetual and will be very big. As the GDP increases, the defence expenditure will also increase and the current world environment, there is war going on everywhere and everybody wants to be dependent on anybody and for Indian defence now India means so much that we are the fourth largest spender in the world in defence and 60-70% we are still importing.
So now, the talk of self-reliance, the talk of self-reliance, the slogan of self-reliance in defence, which Modi ji raised and the way it has been executed, I think this is one of the biggest achievements of Indian policy makers in recent times. So I think its prospects are very long. It is the same that in that because what is there in it, there is only one client, the government, so that is a negative.
Because of that you have to be very careful about when the order comes and when the order does not come, so its valuation should not be too high. But yes, because there will be growth and it is assured, it will be very exciting and growth will also come but the growth will come intermittently. So for that you have to be a little careful at what level you are buying.
Okay, let's have one last question from my side, Navneet Manoj ji is coming to your conference. One is SEBI data, the reply of the Finance Minister, State Finance Minister in Parliament, recent price behaviour, is it becoming a sense that we are shifting from trading to investing as a country. Is that what explains the price behavior of the stock market ?
A few brokerage exchanges are coming down. Stocks of AMC Wealth Management are relatively outperforming the stocks of depositories. Will this analysis be correct? No Anuj, what a face it was, trading had increased a lot in the last five-six years. Meaning, daily trading of $7, 8, 9 trillion was going to happen.
Meaning almost two times your market cap you are trading. Such an atmosphere had arisen. Gross volume grew by 40-50% over and above the nominal value. So obviously there was a little concern. So the regulator stopped him further. So whatever they did, they increased ST or stopped daily expiry and took many other steps, they also stopped the funding a bit.
So, I think all this is good for the market in the long term and although some people will suffer losses due to this, it is not so. But I think the regulator is on top of it and reforms are on but to bring some liquidity in the market because the promoter holding here is very high. So how did liquidity come?
Whether SLBM does it or ah and others do it, what happens with trading? Liquidity remains good. So how do you manage the liquidity as well as investing culture? It is very important to increase this balance. And this will evolve. So I'm not pessimistic about either of them. Brokerage here. There is a slight challenge in brokerage right now in the short term because of regulatory changes.
But the rest should do well on the capital market. All right. Right Ram Sir, thank you very much for joining us. All the best to you for the rest of the conference.
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