According to Ashwini Shami, President and Chief Portfolio Manager at OmniScience Capital, a 15–20 percent rally in Samvat 2083 is a reasonable possibility. He pointed out that whenever the price-to-book value (P/BV) ratio falls below 2.8, the median annualised return over the subsequent 3–5 years has been around 14 percent. He shared this assessment in an interview with Moneycontrol.
Buoyed by strong earnings growth prospects and attractive valuations, Shami is particularly positive on the banking, construction and power sectors in Samvat 2083. He expects these sectors to deliver double-digit earnings growth over the near-to-medium term.
Currently trading at single-digit to low double-digit price-to-earnings (P/E) multiples, these sectors also offer the potential for valuation rerating, generating alpha over and above broader market returns, Shami said.
Are you confident that the ongoing earnings season has been unexpectedly strong, with demand outperforming expectations despite multiple geopolitical risks?
In spite of higher input costs in commodities and electronics, a weaker rupee helped exporters, especially two-wheeler companies and auto ancillaries, achieve better realizations, resulting in favourable rupee profits. Strong demand also helped these companies undertake selective price hikes to pass on part of the input cost increases and maintain margins.