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the most overrated sector in India and the most underrated sector in India probably the most overrated are the banks uh to begin with yeah I told you I told you and the most underrated are the medium-sized companies in a number of sectors in fact you know we've been focusing on those meetings go for the same client meeting he does not like Banks he likes small Cam and mid cap yeah yes correct I'm making friends no my feeling is that the great opportunities are the non-indexed companies that's where the great opportunities are like non-index company which one is not an index companies like the if you look at our portfolio none of them are in the index but they still have good liquidity but uh these are the great companies because the companies you have let's say Apollo and persistent uh you're happy to keep them for next three to five years oh definitely will hold on to them for as long as they continue to grow you know when the amazing thing about India because we do scans around the world in different markets the number of companies that have a return on capital or return on assets of over 20 percent is amazing here it's quite incredible you know we look at other countries they're very difficult to find and if you have a company that has a roe or Roa of 20 or more they usually have no debt or very little debt and usually they're growing at a pretty good pace so this is the great thing about India and it reflects the economy of course the fact that the country is growing so fast the most overrated sector and the most underrated sector you can't say Banks you can't say banks no no I mean because you ask him for doesn't mean that the answer is taken right I agree I mean in my view banks are are you know nilish will disagree of course but that's fine that's a market but my view is it is uh it's not a sector where you know at least I want to put my money in but Nilesh is a large public money manager he can't avoid you know Banks we're given simply the size of the weight in the index but from my perspective and I agree with Mark that I'm you know I have an investment in a company a very tiny company which is maybe around 300 crore or maybe 400 market cap and uh I think the networks is around 45 crores and March 23 the full year they've done about 25 crores in Impact and the owner was telling me that that is still a lot lower than what he thought he might deliver so imagine on a 45 crore balance sheet he is delivering 25 crores in profit he's saying there is room for going to 35 that's a 50 70 percent return on Equity that was phenomenal no country in the world will give you numbers of this kind without any doubt uh how many stocks did you broadly own in your portfolio and what's your style of investment when you are investing in small and mid cap stocks what are the factors you look at I own a lot of companies because I believe that in in investing and in investing in small caps in general I don't want to be concentrated because I would rather be Diversified to begin with and gradually increase based on my confidence on the on the on the numbers in the in the business because there will be a lot of failure rate I will it's not like the promised land in all the companies to be to be clear there will be failures and I'm cognizant I've been been around for 30 years in this game so I keep it fairly wide maybe 25 to 50 companies depending on this kind of the market we are in and graduates like a marathon so you start out with a hundred Runners I've got 100 runners or not that much but 50 and then the field will spread out you will find a bunch of guys leading the pack five or seven Runners then you're clustering in the middle of maybe 10 guys and then there'll be 25 bringing up the rear you gradually eliminate those guys bring the money back into the leaders and them and the Midfield people and bring in new companies to to you know to join the race and it's it's a constant process like I said in a growth country like India there are incredible even IPOs for example some of them are now getting more reasonably priced and you're making significant money even in IPOs leave alone the disasters of the Nikas and the zomatoes I think people have learned their lessons and now you're seeing more reasonably priced IPOs coming to the markets let's make a quick final answer the most overrated sector and the most underrated sector the most underrated thing is management and governance underrated sector promoters so the most underrated thing is management and governance people don't really give too much respect for it they'll go and Dabble in all kind of companies where neither they know management nor they believe there is governance and end up losing money if people start respecting management and governance chances of losing money in stock market is very very limited the most overrated thing is to believe that there is a moat in the business we are living in the world of disruption culture children we need people who are paranoid we need management and companies which are always worried about the disruption coming you have to invest in companies which are disrupting their own business model rather than waiting for the competitor to come and disrupt governance disruption you will make money in stock market for 30 seconds
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