INSUBCONTINENT EXCLUSIVE:
Not any more a kid in a candy store
It's all about the new-found joy of pricing power and getting the goodies you want
That's the analogy Kenneth Andrade used trying to describe the current business environment in India
"The easier process in 2017 and 2016 was raising money and deploying money was the more difficult process
Today, I think it is rightly balanced out," the founder and CIO of Old Bridge Capital told ET Now
"The ability to buy companies has eased a bit at this point in time, but I cannot say I feel like a kid in candy store
It is not that environment."
He has a line of defence ready
Stock valuation may still remain a point of pain, but with some cushion
A big part of Corporate India balance sheet clean-up is getting over
"All put together, the environment for investing is extremely good
Not the entire market is up there
There are a large number of companies that are hitting 52-week lows and some of them are hitting all-time lows So yes, it is moderately
better in 2018," says the renowned fund manager.
What about the risks that gripped midcaps and smallcaps for much of May It's all linked to
liquidity and the fundamentals of the business, according to Andrade.
Many of these companies are expected to command a premium, with a
likely bounceback in profitability in coming years.
As an investor, what does he look for in a stock that can lead to a long-term
compounding story It's a play of valuations and growth, he shoots
He even talks of the success rate in making both the variables work
Query him about his investment in Hathway Cable and Datacomp, with a lot of capital, long gestation and high costs.
He puts it down to a
businesses at an inflection point where profitability stays ahead of deployment of capital
Is there anything that bothers him in the current market "Supply is still a constraint and demand is a question mark If demand is growing
faster than supply over the medium term, that is where the industry has pricing power," he explains, trying to explain the finer nuances of
market dynamics.
For Andrade, the challenge is to stitch together a portfolio with a lot of liquidity around
"Over the last couple of years, markets have been getting a lot of liquidity
Most of the money has come into equity assets
So, it has been a challenge to put a portfolio together because you are always chasing good names and quality names which is bidding up the
prices or the valuations," he sums up.
