Suresh Soni, CEO, DHFL Pramerica Asset Managers, shares his outlook for the economy and DHFL Pramerica's future plans.
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00:00 (upbeat music)
00:02 - From an economy perspective,
00:12 I think we are reasonably well poised.
00:14 In fact, India is one of the largest economies in the world
00:17 which is growing at the fastest pace.
00:19 Happening at a time when the economies
00:21 are struggling to grow.
00:22 Our corporate sector is in a reasonable health,
00:26 I would say.
00:27 And the reason I'm using the word reasonable
00:29 is because we have had almost about three years
00:32 of relatively low profitability growth in corporate India,
00:35 but that is beginning to change now.
00:38 In the current year, we expect the corporate profits
00:40 to grow by about 10 to 12%.
00:42 In fact, starting with the next quarter,
00:44 the profitability growth is expected to be fairly good.
00:47 So overall, I think corporate profitability
00:50 is likely to improve from here on.
00:52 Now, market per se, in terms of valuations,
00:55 are not exactly at the cheapest level.
00:58 In fact, they are probably trading at a little higher
01:00 than their long-term averages.
01:02 More so in case of mid-cap space.
01:08 So overall, while the economic prospects
01:10 as well as the market prospects remain bright,
01:12 the valuations are slightly higher than long-term,
01:15 which of course happens at a time
01:17 when the market is turning a little bit
01:19 from a multiple year of low profitability.
01:22 Having said that, the expectation
01:24 from a near-term perspective should be somewhat moderate.
01:27 Over a long-term, our markets have compounded
01:29 investors well at 15% CAGR.
01:31 So overall, market outlook
01:34 from a long-term perspective remains bright.
01:36 Near-term, improving profitability,
01:39 at the same time, maybe a slight amount of valuation
01:42 above the normal range.
01:44 Within the market segments, I would favor the large cap
01:47 at the expense of mid-caps,
01:48 because they appear to be relatively better value
01:51 at this point of time, compared to the mid-cap space,
01:54 which has seen a serious run-up.
01:56 Over the last, let's say, decade,
01:58 we have seen mid-caps trading at about 10% discount
02:00 to large cap indices.
02:02 Currently, they are trading at about 50% premium
02:04 over large cap indices, and therefore,
02:07 from a segmentation, I would say,
02:09 large cap space offers better value.
02:11 For our company, I would say the acquisition
02:15 of Deutsche Bank's asset management business
02:18 that we did last year was a transformational event for us.
02:22 Post that, we are looking to aggressively build this business
02:26 and would continue on the path of engaging
02:28 more retail investors as well as distributors
02:31 as we go along.
02:32 So, overall, we are poised to grow,
02:34 and we believe that markets
02:36 are looking reasonably healthy, too.
02:38 (upbeat music)
02:41 (upbeat music)