He stated that the primary tenet for evaluating any business, whether new-age or traditional, is its ability to make money. His firm seriously considers businesses that are either profitable or have a clear path to profitability with positive unit economics.
He added that nearly 80% of the firm’s IPO Fund is invested in companies listed within the past year, with the rest allocated to recently listed names in the secondary market.Bhattacharya acknowledged that in smaller and SME segments, “valuation asks are on the higher side,” though such excesses often “get washed out over three to six months once couple of quarterly results come in.”
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Bhattacharya has offered a cautiously optimistic view on the Information Technology sector, suggesting it could be a rewarding ‘contra play’ for investors with a 12 to 15-month horizon.
He noted that the sector’s earnings are in the process of ‘basing out’, a view supported by the fact that the recent quarter saw earnings upgrades of about 1-2% for the first time in four to six quarters.He expects the sector to gradually recover over the next year. “If we do have a trade deal with the United States, sentiment towards tech could improve,” he said, adding that the space could turn into a “contra play” opportunity for investors.
Bhattacharya highlighted that recent results from companies like Cognizant indicate that demand is no longer deteriorating and is even showing pockets of improvement.
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Conversely, Bhattacharya expressed strong conviction in the consumer discretionary space, identifying it as a key area of overweight for his firm. He pointed out that the current earnings season has been marked by a welcome stability and upgrades, a significant shift from the trend over the last year and a half.
Within this sector, he specifically highlighted automobile stocks, which have seen a ‘meaningful amount of earnings upgrade’. Looking ahead, he remains positive on the auto sector, particularly heading into the December quarter results.
He believes catalysts are lining up well for the broader consumer discretionary theme, including an anticipated pay revision next year, which could lead to further earnings upgrades from current levels.
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