Nilesh Shah, MD at Kotak Mahindra AMC, spoke to CNBC-TV18 about the market fundamentals and shared his investment rationale.
“As of today, our portfolio is far more bottom-up than top-down. We are looking to invest in companies where the working capital cycle is not stretched, clearly, we have gone through an unusual phase of tight liquidity and high cost of capital. Companies which are leveraged, the working capital cycle will not be able to benefit. Second, we look to invest in companies which are benefiting from a shift in the unorganised sector to the organised sector because of the introduction of GST, stringent environmental control norms,” said Shah on Friday.
The house is keen on investing in companies where valuations are reasonable and the downside is protected. "So the focus is more on bottom-up approach in selecting stocks," Shah said.
With regards to the NBFC sector, he said, "There is polarisation happening between companies with good governance practices, liability franchises, and good credit processes vis-à-vis companies where there are questions about governance practices or disappointment towards certain credit decisions or where the liability franchise is not strong enough to back credit growth which they have generated historically. So, in this type of scenario, it is usual for investors to gravitate towards their comfort zone and towards companies with good governance practices."