Canara Robeco AMC - Head - Equities
Shridatta Bhandwaldar is Head – Equities at Canara Robeco Asset Management Company, Robeco's joint venture in India. He comes with over 13 years of experience and is actively involved in managing the Canara Rebeco Equity Diversified Fund, Canara Rebeco Bluechip Equity Fund , Canara Rebeco Infrastructure, Canara Robeco Consumer Trends Fund, Canara Robeco Equity Tax Saver Fund, Canara Robeco Small Cap Fund, Canara Robeco Emerging Equities & Canara Robeco Equity Hybrid Fund .
Prior to joining Canara Robeco, Shridatta was Head of Research and Senior Equity Analyst with SBI Pension Fund Pvt. Ltd. He has also worked with other reputable names which include Heritage India Advisory Pvt. Ltd., Motilal Oswal Securities Ltd. and MF Global-Sify Securities Ltd.
Shridatta has successfully completed his MMS in Finance from University of Mumbai and B.E. (Mech) from Aurangabad University.
Q: What is your overall impression from the Union Budget? How would you rate it?
Answer: Overall the budget was a good balancing exercise, given lack of choices on fiscal expansion side. We think that there are three trends in what Government is trying to achieve through budget; 1) Improve portion of productive spending (capital expenditure at 14% of total expenditure) in budget, 2) Reforms in taxation (GST, Corporate tax cuts and simplification of personal tax regime over period) and ease of doing business and 3) Interest rate transmission through RBI which is keeping liquidity in huge surplus. All the above in combination will help the economy to improve from the current rate of 4.5% of GDP. Considering the approach of the government towards boosting the consumption to get economy on the healthier front, this budget looks to be positive for Indian landscape.
Q: Is it worth enough to opt for div. payout for the regular income goal? What would be your advice to the investors who have already invested in Dividend Plan of Equity Schemes for this purpose?
Answer: For all taxpayers with higher than 15% effective tax rate; switching out of dividend plans is a better option in new regime. Investors are better off shifting into growth plans in case of pure equity schemes or to SWP instead of dividend plans (those who need regular cash flows).
Q: What would be your say on the statement of Finance Minister that "Economy not in trouble and green shoots visible"?
Answer: While the economy seemed to have bottomed, its very difficult to say that Green shoots are visible around apart from latest PMI data and good monsoon and its impact of rural economy.
Q: What are your thoughts on inflow in the ELSS subcategory in the coming years considering the new tax regime in which 80C/ ELSS Deduction won't be available? And, as per the Fin. Ministry they are seeing that almost 69% assess would benefit from the New Tax Regime & they opt for it?
Answer: Its very specific based on current deduction being availed by an individual taxpayer.
Q: Is the right time to go bargain hunting in the mid and small-cap space?
Answer: Given the valuation correction that mid and small caps have witnessed over past 24 months, the odds in mid and small cap are better off to their position in the past 3 years. They have underperformed large caps by 25% and 40% respectively in past 3 years. However, only investors who have appetite for volatility and have an investment horizon of at least 3 years should venture into these categories.
Q: What are your views on the current market scenario? What is your future outlook for the market?
Answer: We see current market scenario to be constructive for equities from 2-3 years perspective (short term can be little muted). This view is driven by local factors like, 1) Government's reform agenda to attract foreign and domestic capital, 2) Interest rate transmission in the economy and 3) earnings recovery as GDP and nominal GDP growth rates recover to 5.5% and ~11% respectively over next 12-18months. Besides this, on bottom up basis, lot of companies across sectors are gaining market shares in this tough environment driving earnings growth superior to underlying sectors. Based on above factors, we expect earnings CAGR of 12-15% CAGR over next 3 years from our portfolios. Also, from India perspective, 1) structurally low energy prices and 2) globally low cost of capital will help the equities as an asset class.