Prashant Khemka, Founder at White Oak Capital Management said on Thursday that he believes India is the most compelling alpha opportunity
“What is beautiful about India, what is so attractive is that it provides an opportunity to add a lot of alpha potential, which is having managed money in developed markets like the US and global EMs across 30 countries,” he told CNBC-TV18 in an interview.
He believes asset allocation is something that one has to think very deliberately with financial advisors and come to a certain steady allocation over time.
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“In my view, asset allocation should not be a function of where the market level is. If you decide 70 percent equity is the right allocation and 30 percent everything else or 50-50 percent, you cannot logically move around those percentages as a function of where the market is. The allocation should be more in line with where you are in life, what your risk appetite is. For the last 35 years, almost 100 percent of my net worth has been in equities and predominantly all of it in Indian equities and continues to remain so,” he said.
Khemka said White Oak Capital always approaches the market with the assumption that it is fairly valued and never takes a call that the market is overvalued or undervalued. According to him, regardless of where the market is, there are always relative to the market overvalued stocks and undervalued stocks.
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“We have to identify it all times and we have invested in undervalued stocks. We all talk about the market being expensive and pricier – we are referring to where the current earnings multiple is compared to what the multiple has been over the last 10-20-30 years during our careers. Indeed, the multiples are towards the higher end of the range for the Indian market and also for global markets,” he explained.
Khemka added that it is a very dynamic situation in the new-age companies as it changes by the day. “You need management teams who are adept at decision making and adapting to these changes and in doing so, it is expected from us that the management would try more things than what they would succeed at,” he shared.
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He cited this as the reason why the midcap IT sector has done well over the last few years. Three-four years ago people had written off the IT sector and even more so the midcap IT companies, he said.
“However, IT companies are the most versatile of the companies. They are the ones helping other enterprises to migrate. IT companies have evolved all along, IT companies have shown tremendous versatility,” he stated.
For the full interview, watch the accompanying video.