Hemant Narang

Investor, friend, learner and traveller. RTs are hints, std ETFs will beat everything in the long run if you stay invested. Rest all is Gyan!

[Hemant Narang @hemantnarang]

@Keeninvestor1 Rula ke chodo ge...

[Hemant Narang @hemantnarang]

@dr_ericberg Doing 18 hours every day without fail for last 5 years!

[Hemant Narang @hemantnarang]

@Keeninvestor1 Ratio?

[Hemant Narang @hemantnarang]

@Nithin0dha True, @kotakneo uses a pune based firm, that's why they have so many issues all the time

[Devina Mehra @devinamehra]

How is the market poised in terms of earnings and valuation fundamentals?

Let me give you a quick recap of what I've saying in most interviews for the past few months

In terms of earnings, consumption has been on an uptick.
In fact the absolute bottom in consumption growth for the Indian economy was in FY23/24 (it was a 21 year low) at which point I was the only one pointing it out because the market was still zooming.

It's only when the market started to fall in September 2024 that the talking heads on TV suddenly discovered a consumption slow down - when it was past the trough and was already beginning to accelerate then.

Consumption has picked up both in urban and rural India which is of course good news for most corporate earnings as I have been pointing out.

One other important factor has been the fall in inflation to almost historic lows. There has been not just a fall in inflation but an actual fall in prices of certain goods like food.

Go back a year or two - high food prices were crowding out even everyday products like shampoo and soap from the Indian households' budget.

With the lower prices, there is significantly more room for spending now which is good news for corporate revenues.

There is a further positive development which can provide a margin boost which is the fall in crude oil prices and the consequent fall in several downstream petrochemicals which are inputs for very many industries.

So on the aggregate, there is a positive outlook for both revenues and margins

This was a situation even before the GST cut

It was my call that you would see significant improvement in earnings in Q2 ie the July-Sep '25 quarter

However while the GST cut is positive, the change during the second quarter has meant that there was uncertainty which made the consumers delay purchases. Plus even after the cut was announced, it took some time for various industries & companies to sort out pricing issues for pipeline inventory with distributors, dealers and retailers.

This resulted in some loss of sales in Q2 which will be made up in the third quarter of the financial year ie the Oct-Dec quarter.

Hence the earnings uptick is likely to happen in Q3 instead of Q2

Then comes the price earnings ratio or PE.

For one it does not make sense to look at index PE as that gets skewed by just a few companies. Also the composition of the indexes has changed tremendously over the years which render historical comparisons meaningless.

For example 25 years ago there were no banks or lenders in the major indexes, now they are the highest weight.

If one looks at industry wise PEs, these are not at extreme ends currently for most industries.

Of course PE itself is a very crude valuation measure as there are several underlying factors that determine the PE even for a single company including the earnings growth, the cost of capital in the economy, the equity risk premium and most important, the return of capital employed for the company.
For those interested, there is a chapter in my book 'Money Myths and Mantras' which explains the PE drivers in more detail.

All in all, I expect better earnings from the Oct-Dec quarter onwards and even at present in spite of sluggish earnings growth, the valuations do not appear to be at extreme ends.

In terms of action points for the new samvat
1. Never have 100% of your investments in equity
2. Remain invested to the extent of your equity allocation.
3. Do not remain invested in narrow themes.

Yeah. Hardly very exciting 😉.

BUT doing the boring things right is how you respect Lakshmi Ma in this season

Happy Diwali 🪔 🪔

[Hemant Narang @hemantnarang]

@devinamehra Thank you and happy diwali to you and your family!

[Hemant Narang @hemantnarang]

@MohnishPabrai @GSpier We are ready for the next video and to understand a new business 🙏

[Hemant Narang @hemantnarang]

@KirtanShahCFP Well their portal is also incapable of handling transactions online, I bet 80% folks don't want to manually apply.

[Hemant Narang @hemantnarang]

Here's some reality update, in the era of AI the so called market disruptor AKA @JioBlackRockmf is expecting to fill the forms and submit to be able to invest with them. Shouldn't U have worked on IT more than creating the marketing hype? Whn ws d lst time u filled a manual form?

[Hemant Narang @hemantnarang]

@pattufreefincal Summary here, great article.

[Hemant Narang @hemantnarang]

@KLM this is not diversity of food, this is called a scam. Which is what you have at your lounge at the IAH

[Hemant Narang @hemantnarang]

@KLM here, this is called diversity of food

[Hemant Narang @hemantnarang]

@KLM the staff at the lounge is stinking, can't stand next to them even if they are passing by. Are you guys sure this is the experience u want ur customers to get? 0 food, stinking staff and no smiles at the reception?
@emirates tie up with KLM? They are killing ur reputation

[Hemant Narang @hemantnarang]

@KLM - here are the so called Food pics from your KLM lounge and beef balls, are you 100% certain that everyone HAS to only eat that? A bigger joke is ur lounge survey says diversity of food, where is the Food? @emirates - why r u spoiling ur name with KLM?

[Hemant Narang @hemantnarang]

@DGCAIndia - any reason why airline is allowed to charge a 750 convenience fee first at booking and then charge the same fee two times while canceling the tickets? Yes 1500

[Hemant Narang @hemantnarang]

@devinamehra - finally getting started with it!

[Hemant Narang @hemantnarang]

@AdeParimal badhai ho

[Hemant Narang @hemantnarang]

@AirIndiaX Just did

[Hemant Narang @hemantnarang]

@AirIndiaX - why there's a paid seat selection even for Business class? Why I pay you more 4 this basic option? Also, I called and after 15 minutes of total waiting time, I'm told that this is raised with the authorities. Really? No wonder you guys are on don't fly list.

[Hemant Narang @hemantnarang]

@connectgurmeet Loved the episode veere