Market veteran Raamdeo Agrawal has called Zepto's IPO plans premature after the quick-commerce firm deferred its proposed listing amid valuation concerns. As reported by The Economic Times, Zepto is reportedly discussing a valuation of $2.5-3 billion, sharply below its $7 billion private valuation. The company deferred its proposed IPO after agreeing with major shareholders to close a pre-IPO equity funding round. Agrawal stated that 'Till companies are actually profitable, or very close to becoming profitable within a visible timeframe, they should not tap the public market. Because it is very difficult to make the public market understand the underlying value.' He emphasized that 'You could be growing at 100%, and so there will be a cost of acquisition and, hence, there will be some losses. A large private investor can understand that; the public market cannot.'
According to The Economic Times, Raamdeo Agrawal of Motilal Oswal projects that Indian equities may yield 15% annual returns over the upcoming five years. In an interview with Nishanth Vasudevan, the seasoned investor stated that making 15% annually over the next five years seems the most likely outcome, which would double a portfolio. Agrawal noted that markets have stagnated for two years and may experience another year of stagnation, with the Nifty trading at 20 times earnings. If earnings grow by 15%, the P/E multiple can be reduced to 17, suggesting markets will likely rise by 15-20%. Speaking at the 22nd Motilal Oswal Annual Global Investor Conference, Agrawal emphasized that 'My sense is this is the start of an earnings acceleration. And this is the first quarter.' He expects the Indian economy to grow at 7.5-8.5% while corporate profits could grow at 13-14%, with the index itself giving 12-14% returns.
As reported by CNBC TV18, Agrawal expects Nifty earnings per share to climb from roughly ₹1,250 this year to between ₹1,425 and ₹1,450 next year. He projects 12-14% annual earnings growth for the Nifty over the next four to five years, even as he cautioned that the current pace of over 20% growth across listed companies will not hold indefinitely. The growth is being driven by two key policy changes: GST cut from 28% to 18% and a jump in credit flow from 9-10% to 17-18%. Corporate tax collections are up 22-23% through mid-August, while GST collections are growing at about 15%. Agrawal noted that 'This is the start of an earnings acceleration. And this is the first quarter.'
As reported by The Economic Times, foreign investors are currently chasing momentum in markets like South Korea and Taiwan, with the biggest momentum in the US itself. This quarter, US earnings are up 47%, making it difficult to attract foreign capital to India. Agrawal explained that India had become the funding market for foreign allocations to other emerging markets due to the AI story, but now they are completely rattled by events in Korea. The good news is that FIIs are in a 'stop selling' mode in India, which solves 90% of the problem according to Agrawal. He noted that while there is pessimism among investors, all these challenges will someday be behind them, and the regulatory requirements will eventually be resolved. Speaking to CNBC TV18, Agrawal believes geopolitical tension, not weak earnings, is the main factor holding back FIIs from Indian equities, with FII selling already slowed and prices expected to catch up once earnings growth is confirmed over further quarters.
According to CNBC TV18, Agrawal named autos, data centers, power, and transformers as sectors already performing well, along with consumption-linked companies including quick service restaurants (QSRs) picking up. The quick commerce sector will keep growing at more than 40-50% a year for the next four to five years, well above the 14-15% growth rate for overall consumption. General trade could shrink to half of total distribution over the next decade, with quick commerce taking up at least a third of the fast-moving consumer goods (FMCG) distribution market. Agrawal highlighted the private banking sector as remaining one of the largest contributors to Nifty profits and having been among the best-performing parts of Indian markets since 1995, led by HDFC Bank. He noted that mutual fund industry assets under management (AUM) have grown at about 30% a year over the past decade and currently stand at about ₹80 lakh crore, with potential to reach ₹400-500 lakh crore over the next decade even at 20% annual growth.
As reported by The Economic Times, Agrawal highlighted the banking sector's pristine balance sheets as a key opportunity. With credit growth at 18%, the industry has the most pristine balance sheets he has ever seen. Banks including ICICI, SBI, and AUs are positioned well, along with Federal Bank or Karur Vysya Bank. When you have an economy with a ₹230-240 lakh crore credit book, 18% growth is massive, making the sector attractive for investors. Agrawal noted that there is pessimism among investors at large, but the banks are rock solid, with valuations at among the lowest in their history. He believes the industry has the most pristine balance sheets he has ever seen, and the ones with the best management will do well.
According to The Economic Times, Agrawal has become slightly more positive on IT stocks due to AI disruption, noting that jobs will not be the primary issue but market expansion will be. He stated that the bargaining position of services companies is weaker, making them 'headwinded' but not as disastrous as feared 12 months ago. Current valuations reflect almost a terminal-value situation with zero growth, offering 5-6% free cash flow yield around bond yields. Agrawal believes they have seen the bottom but the growth phase has not yet started. He noted that financial markets have seen big bubbles in 2000 and 2008, and markets are very alert to the AI situation, with a self-correcting mechanism where people go overboard and then come back.
