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Long-term structural story of India is still intact, says Ellerston Capital

Updated : August 27, 2020 11:12 PM IST

Mary Manning, portfolio manager at Ellerston Capital on Thursday said it's investing in India as the the long-term structural growth story of the country is still intact.

Speaking from the sidelines of Motilal Oswal Annual Global Investor Conference, Manning said, "We have had to rejig the portfolio a little bit since COVID-19. Traditionally, the portfolio has been very focused on financials. However, right now, I don’t think there is enough visibility in that sector given the potential asset quality issues that are going to come out post-COVID to have very big ratings towards financials. So right now, we have a lot in consumer particularly staples and not buying any of the recovery plays."

Speaking about growth estimates for India, Manning said, "Developed markets are trading at 18-20 times P/E and they are only growing at single digit. So if India, overall, can grow at double digit and the P/E is in high teens, you are still getting a much better valuation than you are getting in some developed markets."

On auto stocks, she further mentioned, "We do like Maruti Suzuki and that is the stock which has been in our portfolio since inception. So that is a long-term holding. Mahindra and Mahindra is the stock we have invested in the past and that is a very good rural play."

"I have a very strong bias towards large cap stocks. The reason is as a foreign investor, we know that India can be volatile and that when liquidity dries up, those very high beta smallcap and midcap stocks can damage your portfolio. So I generally tend to stick with the very largecaps and that is why Infosys and Tata Consultancy Services are the two largest IT services stocks in my portfolio," Manning said.
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