If you look at interest rates in India, the corporate sector is pretty much deleveraged unlike in the previous cycles, where the corporate sector was significantly leveraged and rising interest rates posed a very big problem to companies. Having said that, in terms of our philosophy, we do not buy into companies which have too much leverage or even if we are buying into companies which have leverage, we are very confident that over the next 12-24 months the leverage is going to come down very significantly
One reason why the markets have held up so well in India is because after a long time, earnings growth is looking real. It is not that every year we start with 15% and end up 4%. In a Covid year, earnings were up 18%. The next year, which is 2021-22, earnings were up 37-38%. On top of these two years of earnings growth, we were talking about a 17-18% earnings growth which may settle at 14% because some cuts will come in commodities and metals and energy. But overall, the earnings picture looks much better in India this time.
No comments:
Post a Comment