MUMBAI, India, May 10, 2024 /PRNewswire/ -- India has remained a steady ship in choppy
waters says DSP Asset Managers in the May
2024 edition of its report #DSP7Sees which highlights
compelling historical and contemporary facts shaping the Indian
market. The report mentions that while most global economies have
seen a slowdown in their manufacturing sector or services, or both
over the past 12 months, India has
seen a consistent growth in economic output and business sentiment.
This consistency is probably the first evidence suggesting that
India's economic and businesses
cycle can withstand global turbulence of manageable magnitude.
The report highlights the sharp contrast between how
India and China have performed for investors. Since
2007, China delivered the fastest
pace of GDP and per capita income growth that the world has ever
seen. However, it has delivered little for investors. Meanwhile,
India has been one of the best
performing markets globally, across periods thanks to Indian
corporations delivering earnings growth. The report highlights that
investors have perhaps erred by putting copious amount of funds in
other countries while largely ignoring India's profitable corporate dynamics.
Over the past 30 years, China,
with a CAGR of 14%, stands as the sole nation to have surpassed
India's 8% Gross Fixed Capital
Formation growth. Fueled by cheap domestic credit, Chinese growth
contrasts with India in one
aspect: Indian growth has come with higher return on equity.
India has come out of an
investment winter. The investment to GDP ratio (measured as gross
fixed capital formation to GDP) peaked in 2011 and remained low
until the COVID-led disruption upended the supply chains. Post
COVID recovery and a large push through government expenditure,
investments are making a comeback. Over the last seven and a half
decades, $14trn has been spent on
investments since independence. India has spent $8trn on new investments over the last 10
years.
The steady pace of earnings growth and a favorable businesses
cycle has ensured that Indian stocks are well bid and are relative
outperformers. This also means that Indian stocks aren't the
cheapest. Among large emerging and frontier markets, Indian equites
are among the pricier regions. DSP says that it's difficult to say
if India will continue its
performance, thus commanding such high multiples.
DSP feels that Indian lenders, both banking and non-banking
financial companies can deliver a better investment experience. The
all-time low NNPA ratio for Banks is a source of comfort. The high
Provision Coverage Ratio suggests a better ability to absorb
potential losses. Other factors include continuation in asset
quality & relatively higher increase in credit as compared to
deposit, translating into a higher Credit-Deposit Ratio.
"Valuations respecting investors need to dial down their return
expectations. Lower entry valuations are the best defense for
investors seeking to invest in India for the long haul,"
said Sahil Kapoor, Market
Strategist & Head of products, DSP Asset Managers.
Link to #DSP7Sees report:
https://www.dspim.com/documents/dsp-7sees-seven-charts-we-want-you-to-see.pdf
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SOURCE DSP Asset Managers