저자: RaamdeoAgrawal · 외국인
요약 보기
결론: 인도 시장은 장기적으로 밝지만 단기(12개월) 상승 여력은 제한적이며, 2023년 4분기 실적 회복 흐름을 근거로 지수 1만5~1만7천 구간 돌파 가능성을 언급. [실적 시즌 전반] - 4분기 실적에서 긍정적 서프라이즈 다수(네슬레, 마루티 등) - 민간·공기업 은행 전반 견조, 은행 자본 충분해 정부 지원 불필요 - 원자재·물류 비용 하락이 2분기 이후 마진 개선으로 이어질 전망 - 2023년 경제성장률 6~7%, 인플레이션 4~5% 전망 [환율·경상수지] - 루피 강세 지속, 경상적자 1% 수준으로 축소되어 조달 용이 - 연간 3~4% 루피 약세가 금리·인플레에 부담이었으나 완화 기대 [이익 전망] - 니프티 이익 성장률 연 15~17% 전망, 농촌 저가 소비 등 일부 약세 존재 [은행] - 은행이 인도 시장 약 45~50%를 차지, 이익 성장 양호하나 NIM 축소 우려 - 지난 12개월 같은 초과수익(알파)은 제한적일 것으로 봄 [IT] - 대형 IT 우량주는 밸류에이션 조정 완료, 장기 투자 시점으로 분할 매수 언급 - 중대형(LTI 유형) 선호 [제조·자동차·부동산] - 자동차 수요 3월부터 회복, 주택·건설 자재 수요 양호 - 금리 100bp 인하 시 주택 수요 확대 기대 - 전기차 전환은 현금흐름 측면에서 완만 [수급] - 외국인 자금 유입 재개, 국내 고정수익 자금 이동으로 주식 재유입은 지수 상승 후 나타날 것 - 지수 상승 시 개인 자금 재유입 기대 [자사·기타] - 자산운용·자본시장 부문 부진, 주택금융은 회복 - 투자 포트폴리오 순자산 성장률 12~15% 기대 - 신성장 기업(Zomato 등) 최악은 지났다는 판단
다듬은 글
Well, hello and welcome to this special program. Markets are, of course, about four or five percent away from all-time highs. Will we get to all-time highs? Can the market continue to perform the way it has since the lows made at the end of March? That's the question, and who better to answer it than Ramdeo Agrawal, chairman and co-founder of Motilal Oswal Financial Services? He's with us here in our studio. Great to have you with us. Good morning, and thank you very much for making the time.
We're in the midst of the earnings season, and you're a very close watcher of earnings. You've always believed that earnings will eventually dictate where stock prices go. So what's your reading of what we've seen so far from the fourth-quarter results?
Yes, in the fourth quarter we're seeing some positive surprises in earnings. Nestle, Maruti's numbers, and others were bright spots. Banks across the board, both private and public, were strong as well. In my 30 to 40 years of experience, this is the best banking system I've seen, whether private or public. You have a very robust banking system: profit growth, loan growth, lowest credit costs, and every bank is well capitalized. The government doesn't have to provide any capital support to the banking system. So I think it's really ready to fund Indian economic growth. That's one good thing I see.
Last year could have been a very good year, but for the Ukraine war and the inflationary and logistical disruptions. But that seems to be subsiding now. I've visited a lot of companies, and all of them say costs are definitely declining. It may not show up in the benefits this quarter, but Q1 and Q2 should be much better, because the high-cost inventory will be consumed in this quarter and next. From there onwards, you'll see margins expanding. So I think earnings momentum will build slowly from here. The economy is likely to grow at six to seven percent, with inflation at four to five percent. Another bright spot is the stronger rupee. I don't know exactly where it's trading today, but yesterday it was around 81, 75 or 77. There's been continuous strength in the rupee.
The current account deficit shrank in Q4. Is that a one-quarter phenomenon, or will it repeat? The services strength we saw over the last four quarters, will it continue at that pace?
We're at a very interesting turning point in the Indian economy. By chance, our current account deficit comes to about one percent of GDP or so, which can be funded very easily. The rupee-dollar relationship, where we keep losing three or four percent every year, has huge implications everywhere: interest rates, inflation. There we might get some relief. Even if the depreciation comes down to a percent or so, the RBI will be able to build reserves of a trillion or two. So I think we're in a very good spot.
What's your sense on the acceleration? Many have said there will be a deceleration after the third-quarter earnings, or that we'll go through more downgrades this year because the world is slowing down, and some of that will show up here too.
Indian economy has its own momentum. The government has set its own momentum, and India is the fastest-growing major economy. If you look at the first three quarters, top-line growth for corporates was around 15 to 16 percent. The problem was cost inflation that they couldn't pass on, so earnings were very muted. Q4 is looking much better in the aggregate numbers. My sense is that going forward, we'll see at least 15 to 17 percent earnings growth across the Nifty. There will be some spots of weakness. I believe part of the rural economy, the low-end discretionary spending, is still pretty weak, but that will always be there for one reason or another. Once earnings momentum picks up across the board, retail behavior will follow.
Looking at the longer term, five to ten years, India is the only large economy that can sustain five to seven percent growth for ten years. China has done what it has done, and its growth story still remains intact, but its stock market story is gone nowhere. After us, it's only India where you have the opportunity to go from three and a half trillion to seven trillion dollars in GDP. If the rupee doesn't depreciate over the next five to seven years, you could achieve that in maybe five or six years. You and I can't imagine how India will look in 2030. So the long-term picture for India is very bright.
But for the next twelve months, do you think banks will be outperformers or market performers? Everyone is expecting good numbers, so in a way it's priced in, and it has already outperformed. There's also a risk of NIMs contracting. Can banks generate the alpha they did over the last twelve months?
I don't think it will be a huge alpha. Banking and IT are the two largest segments of the market, together making up about 45 to 50 percent. If the economy slows, those will be affected. In the U.S. banks are doing very well, but in India, because of earnings slowdowns, I think the market will price that in this year. What's left is banking, and banking earnings are going to be very good this year. There's talk about NIMs contracting by maybe 10 or 20 basis points, but the top line will still be pretty good, and operating leverage will also come through. So my sense is that the current year should be good for banking as a whole, but I don't know how big the outperformance will be.
Banks continue to do well on their results, but what about IT? That's been the big disappointment, right? It's the other smaller pillar.
Clearly, valuations have corrected, and there are very good quality companies. If you're buying, as you said, to invest for a somewhat longer duration, now may be a good time to start nibbling. The India story is tied to the way this will come back, with growth rates that might come down from 12 or 13 percent to maybe high single digits, seven to eight, or ten percent. When the U.S. and world economies come out of their shells and companies start investing in their IT again, we'll get orders. So it's a good time to start dipping in. You can go stock by stock, but you have time to build up your portfolio.
On mid versus large IT companies, which ones qualify?
Companies like LTI, in the two-to-three-billion-dollar range. They don't suffer from lack of scale, and they don't suffer from the drag of very large scale.
That's very well put. We've spoken about banking and services, but what about the third leg, manufacturing? We've been waiting so long for it to start firing. We have to take a quick commercial break, and we'll be back with that in just a bit.
Welcome back. We're in conversation with Ramdeo Agrawal of Motilal Oswal Financial Services, and we've discussed banking and IT. Now let's talk about manufacturing. Green shoots have started, but not very steadily, although hopes are always high. There are always segments within manufacturing doing well. Take defense, or railways, which have done extremely well over the last two or three years. What's your sense there?
The biggest part of manufacturing in India is automotive: cars, tractors, motorcycles, scooters. That's basic transportation. The high incidence of GST and other things has hindered an immediate demand pickup, but demand has picked up. Cars have done very well, and I believe even two-wheelers have picked up reasonably since March. Let's see whether April and May are also good. I think automotive is picking up. Only two things drive a broader recovery: housing starts and autos. Housing demand is very good, and real estate is very good. All the components of real estate, cement, steel, plywood, paints, and all the building materials that go into a house, benefit. That's a large part of manufacturing. That should pick up as interest rates stabilize or start to come down a little. Automotive has one problem: the EV versus internal combustion confusion, over who will transition successfully. Multiples may be in question, but earnings should hold up. The transition to EVs has been very fast in China and Europe, but in India it's still very slow. Cash flow will definitely come through. Look at Maruti's capex announcement, where they talked about a third plant. That shows demand building up, because it's an aspirational manufacturing company.
We had the management of Lodha with us recently, and they said we're in the second or third year of what will be a longer-than-usual real estate upcycle. Do you believe that?
I haven't made money out of real estate, so I can't say much, but I think this is almost a lost ticket for them. It must last, because ultimately housing needs are there. Everybody needs a house, and there's a large gap between housing stock and demand. Interest rates are very important here. If we can get interest rates a little lower, say from today's seven and a half or eight percent by even 100 basis points, the demand run for housing will keep building. And the rupee-dollar relationship plays a role. If you keep losing four percent a year, that feeds into inflation. If that becomes zero, at least half of that will flow into a decline in inflation.
Are you worried about a rural slowdown extending itself? HUL's volume growth numbers weren't very inspiring this time.
I spoke to one or two companies catering to rural markets, and they say basic demand is there, but discretionary spending isn't doing well. Is that because of inflation, high tax incidence, or just that construction transfers haven't fully picked up? A lot of rural income doesn't come only from agriculture. It also comes from transfers from urban centers to rural areas. The trickle-down may take another six months, because the dislocation from COVID was very deep. I think it's a trickle-down, and maybe another six months plus a good monsoon will do the trick.
I'd like to ask a couple of questions about flows. I recall you telling us that FIIs were having it easy getting out of the market, and that when they had to come back it would be painful at higher levels. That seems to have played out in the last month or so, with more buy numbers from FIIs.
Yes, I already see FII flows moving. And on domestic flows, you're now getting fixed income at seven or eight percent. Do you think domestic flows could cool down a little?
They've definitely cooled down. The people who came in haven't lost money, because the market has been steady, but they haven't made much money either. And those who went into fixed income didn't have to go through the ups and downs, and still made around seven percent. So as the market takes off from here and goes up by 20 percent, the power of equity will come back, because the earnings yield is at twelve instead of six percent. That shift in asset allocation to new investors is yet to happen. The index has to go from the current 17,000 to 18,000 up to more like 20,000 to 22,000. Whenever that happens, maybe next year or the year after, I have no doubt it will. When it does, people will realize that this is where the money is made. The real fun will be when earnings growth picks up to 20 percent, with the rupee stable, and the P/E multiple also at 20.
because next year we're talking about 900, anywhere between 25 to 50. So then you're at 18,000, so you're talking about less than 20 for '24, yes, which is kind of reasonable. So then FII is also a pile—lots of things are converging into what can happen in the next one here, so that's what we're hoping.
Let's get to the earnings. They've been a little subdued, yes. If you look at asset management, asset and wealth management, and capital markets numbers, they've been subdued on a year-on-year basis. Home finance is the one that seems to be the bright spot. Yeah, tell us what the thoughts are on all the businesses.
We had a bit of a problem in the last two or three years in housing finance. Now, with what is happening in the entire financial sector, this has also picked up, and now we are out of the woods, I would say. There is 50–60% growth in profits, and it looks good in the years ahead, so I think that is one achievement. The rest of the businesses are stable.
Actually, it's the twin engine: one is the operating business, and the other is the investment portfolio. The investment portfolio is 100% equity. Last year, when the market was flat broadly, the portfolio has remained stable, so there is no accrual because of that, which is very—60–70% of the balance sheet is there, whereas the earnings side has done 4–5% higher only, all put together. So clearly my net worth has grown about 12 to 15% in the current year, from 5,600 has gone to 6,250. And the moment the second engine also works in the next year or year after, then you will see—I think the last eight years' compounded growth in net worth has been more like 24–25%. So I think those rates will come back, but the current year is not matching that.
All right, quick final question then on the index itself. With a one-year horizon, will we be at 19,500, 16,500, or do you think we consolidate at these levels, or will it be higher?
I don't know how much higher. That's a safe answer, yeah. He also mentioned that 700 points higher, no, or 1,500—500 points ago. So which one do you want to go for, 1,500 higher? I would think so, because once one year is negative, then you have longer underperformance, and that 12 is getting accumulated. So I would think 15–17. It is ready for a move.
Redeemable preferences—so if you don't pay now, you're going to get it later on. On the investment book at Motilal, anything you've added? No, it's the same. I'm in public and private; some kind of split is there, so that continues. Public market side, and anything? Because you keep evaluating opportunities. Yeah, no, nothing directly. Yes, it's all going into—in fact, last year accretion to the investment portfolio was low because of all these regulatory changes, which is taking a lot of free cash flow from the operating side into the businesses, and these new-age businesses.
You had a strong view on things like Zomato, etc. How's the view panning out now, because I think the worst is behind? Yeah, the worst is behind. We have seen the peak of pessimism, and some kind of—I would not say optimism, but some kind of sensitivity is prevailing. Even managements are going for a faster road to profit, and they are struggling, because they're not used to showing profit. So they have to work extra hard to change the track, and instead of losing money at the cost of a little bit of growth, they have to make the model more profitable.
Absolutely. It's a pleasure speaking with you as always. Thank you very much for dropping by, and we hope you can make it a regular feature. Thanks very much. Well, that's Raamdeo Agrawal, Chairman of Motilal Oswal Financial Services, on all things markets and, of course, earnings for the fourth quarter from the company as well. It's a good buy from all of us here. Rima, Nigel, Mihir, and the team on Bazaar, thanks very much for watching. More coming up in just a bit.
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