Anand Radhakrishnan, Managing Director and Chief Investment Officer – Emerging Markets Equity – India, Franklin Templeton
Photo: BCCL
New Delhi: Anand Radhakrishnan, Managing Director and Chief Investment Officer – Emerging Markets Equity – India, Franklin Templeton says that the battle with inflation is half won as of now. “Services inflation is raging and still needs to peak out. The commentary from the US Federal Reserve puts in light the challenges in front of the Fed. But I believe we are not going back to square one on inflation but yet to see liquidity normalise.” Radhakrishnan believes that the tight labor markets and property prices are drivers of inflation.
Radhakrishnan says that the Indian banking sector is favorably placed after high provisions and the sector is on the cusp of a new credit cycle driven by working capital demand and expenditure demand. “The top 6-7 banks have gained market share, the predominant bet has been with well-positioned banks in corporate and retail credit. Global cyclical have seen growth taper off.”
“Re-rating and derating go with the growth cycle and we see growth coming back and valuations getting de-rated,” said Radhakrishnan. Zomato has been a recent addition to the portfolio, and he believes that new age tech has seen fintech, and food tech emerges and disrupts business models with value delivery and the profit motive. “Some companies have a clearly defined value proposition. With people avoiding long-distance travel, we are seeing platforms like Swiggy and Zomato being used as a habit and people adopting these platforms. I think the stars are well aligned for new age tech.”
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When it comes to the IT sector, Radhakrishnan says pressure on companies to cut costs is evident. “The short cycle projects will cool off and pressure on margins, wages and attrition will ease up significantly. We believe outsourcing -cos are well positioned and the sector will bottom out in terms of near-term growth. Companies that are well run, cash generative will do well and we remain constructive on the sector.”
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