Consumption: A Medium-Term Growth Story
When asked about his overweight stance on consumption, Bhandarkar noted that the sector had been lacklustre in recent years due to lingering COVID effects on personal incomes and relatively high GST rates. “Over the last few years, some of these factors have got corrected. We have also seen the borrowing rates come off, liquidity come off. So, to that extent money has been a little easier. All these things are sort of better for consumption,” he explained.
Bhandarkar added that historically, consumption tends to gain momentum once it emerges from a slump. “It is our hope that this will be a medium-term kind of a growth phenomenon from here on, especially from the fact that consumption has been so depressed for a little while now,” he said.
Investment Approach: A Balanced Basket On how he is playing the consumption theme, Bhandarkar stressed a measured approach. “We are trying to play it with a nice basket of whatever a consumer would want to play. We definitely see a play in autos, which are discretionary consumption. We also see pockets where incremental savings can go, perhaps in QSRs or even quick commerce businesses. We are also trying to see a secondary play through financiers, NBFCs, and fintech which can benefit from this uptick.”
Quick Commerce: Opportunity Amidst Valuation Concerns Addressing concerns about profitability and valuations in quick commerce, Bhandarkar acknowledged the challenges. “Quite clearly, the valuation has been a constant irritant in some of these companies. People find them difficult to value, that is a fact. But these are very large opportunities when you look at the overall size that India offers.” He emphasized that the sector is reasonably oligopolistic with strong tech-enabled solutions, noting that some Indian companies are now being replicated in developed markets. “While you grow, there will be challenges—from competition to government regulations—but these companies have a history of solving several challenges. We are quite sanguine about their capabilities,” Bhandarkar said. Themes and Sectors in Focus Beyond consumption, Bhandarkar sees value in financials, which have underperformed in recent years. “Valuations look quite fine to us. Asset quality is pristine all across, and we are seeing a very good choice set—not just banks, but wealth management, asset management, and several of these businesses,” he said.
He also highlighted exporters as an area worth attention. “Exporters, who have been a little out of favour due to global geopolitical tussles, may need to be looked at again, given the way the rupee has behaved,” Bhandarkar noted.
Navigating a Tricky MarketDiscussing the broader market environment, he admitted it is a challenging juncture. “Medium-term growth outlook should be challenging. Rupee does give some support. Valuations are okay, but it is a tough one to be very frank. The export basket, however, is much more than just this business.”
Bhandarkar’s insights suggest a cautious yet diversified approach—balancing consumption plays, financials, and select exporters—as investors navigate the complexities of a recovering yet uncertain market.
