India has remained a steady ship in choppy waters says DSP Asset Managers

Over the past 30 years, China, with a CAGR of 14%, stands as the sole nation to have surpassed India's 8% Gross Fixed Capital Formation growth. Fueled by cheap domestic credit, Chinese growth contrasts with India in one aspect: Indian growth has come with higher return on equity. India has come out of an investment winter. The investment to GDP ratio (measured as gross fixed capital formation to GDP) peaked in 2011 and remained low until the COVID-led disruption upended the supply chains. Post COVID recovery and a large push through government expenditure, investments are making a comeback. Over the last seven and a half decades, $14trn has been spent on investments since independence. India has spent $8trn on new investments over the last 10 years.

The steady pace of earnings growth and a favorable businesses cycle has ensured that Indian stocks are well bid and are relative outperformers. This also means that Indian stocks aren't the cheapest. Among large emerging and frontier markets, Indian equites are among the pricier regions. DSP says that it's difficult to say if India will continue its performance, thus commanding such high multiples.

DSP feels that Indian lenders, both banking and non-banking financial companies can deliver a better investment experience. The all-time low NNPA ratio for Banks is a source of comfort. The high Provision Coverage Ratio suggests a better ability to absorb potential losses. Other factors include continuation in asset quality & relatively higher increase in credit as compared to deposit, translating into a higher Credit-Deposit Ratio.

"Valuations respecting investors need to dial down their return expectations. Lower entry valuations are the best defense for investors seeking to invest in India for the long haul," said  Sahil Kapoor, Market Strategist & Head of products, DSP Asset Managers.

Link to #DSP7Sees report: https://www.dspim.com/documents/dsp-7sees-seven-charts-we-want-you-to-see.pdf

View original content to download multimedia:https://www.prnewswire.co.uk/news-releases/india-has-remained-a-steady-ship-in-choppy-waters-says-dsp-asset-managers-302142343.html