“We are a very resourceful nation that needs to be guided well by politicians. We can add a trillion dollar to our market capitalisation over the next two to three years,” says Porinju Veliyath, MD & Portfolio Manager, Equity Intelligence India, in a chat with BusinessLine . Edited excerpts:

From a law background, you have moved to fund management now. How did you make this transition?

Equity has been my passion since college days. I used to be a regular at the public library in Kochi during the ’80s, was inspired by stories of CEOs, the size of corporations and the value of brands.

After graduating in law, I took the next train to Mumbai, the capital of capital markets, and started my career as a floor trader at Uday Kotak (Kotak Securities) in 1990.

It was an exciting journey. I worked with Parag Parikh Securities during the late ’90s, got exposed to institutional dealing, equity research and fund management. I returned to Kochi, my hometown, in 1999.

What was your first investment after returning to Kochi?

Back home, I was amazed to see the market cap of Geojit Securities at ₹2.5 crore — a professionally managed futuristic business — available at below book value, four times the price-earnings multiple and 6 per cent dividend yield.

I invested most of my money by acquiring nearly 8 per cent of the company’s equity. The market cap moved to ₹3,000 crore in a few years and now quotes at ₹800 crore (bullish now).

Kitex Garments was another Kerala company that surprised me with two times the price-earnings multiple.

I bought significant stake under portfolio management system at around ₹30 crore market cap, which moved up to ₹5,000 crore and is currently valued at ₹2,200 crore (well-priced).

What are the lessons you learnt from the market in the last 25 years? What is your advice for investors who plan to remain invested in equities for the next 25 years?

Keep investing, simple! We don’t know how the world will look like in the next five years, but one can predict with reasonable precision how India will be in five years! Look at the big picture; India is too small with a $2-trillion economy and has a long way to go.

Keep your eyes and ears open for ideas, which are in abundance in the world’s fastest growing economy.

With export growth stagnant and debt levels high (among both public and private sectors), what are the opportunities in the capital market over the next five, 10, 20 years?

I think these are not such vital parameters, considering the global economic scenario, to measure the health of the Indian economy. China’s overall debt is around three times GDP compared to India’s roughly one time.

Our public debt is around 50 per cent; of this, external debt would be less than 2 per cent. It would be meaningless to look at the absolute export data without considering the global economic scenario and the fall in crude prices.

I think imports have also fallen and our trade deficit is near a yearly low.

Do you think debt investments will start getting higher priority compared to equity?

Equity as an asset class has beaten all other asset classes historically, be it debt, gold or real estate, and will continue to outperform in the future.

Equity exposure by Indians is unsustainably low and I expect it to catch up significantly, going forward.

Where do you think Nifty will be in the next two years?

I am not a technical guy, but Nifty at 8,000 looks like a rational bottom. If you adjust for inflation, the market is still at least 15 per cent below the January 2008 levels.

This is without considering the progress companies have made in the last eight years. I would be surprised if the Nifty doesn't go to 12,000-13,000 in two-three years.

Which sectors are you bullish on?

From a stock-picking point of view, I am bullish on every sector, given the structure and dynamism of the Indian economy. I am a bottom-up stock picker and a value investor.

One should look at beaten-down sectors with curable negatives; companies with decent balance sheet and quality assets which can survive the operating challenges. Infrastructure stocks can be multi-baggers once the hurdles are crossed.

What is your investment philosophy?

I am a pure value investor in Indian equities and don’t believe in the word investment philosophy. Simple common sense and wisdom works better than philosophy when it comes to investing.

Who is your favourite investment guru?

Chandrakanth Sampath, who is no more.

I learnt a lot from him in the initial days of my career.

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