'...as we believe with the adoption of AI, our IT services companies' revenue models will have to undergo a reset, which may in turn impact their potential for earnings growth.'
Key Points
- 'The biggest global risks remain West Asia tensions and climate disruptions like a super El Niño'.
- 'The time is ripe for India to outperform the Emerging Asia and emerging market regions.'
- 'The next leg of earnings growth is bound to come from the MSME segment.'
As asset management companies (AMCs) compete to garner investors' attention, Dinshaw Irani, managing director and chief executive officer, Helios India, told Puneet Wadhwa/Business Standard in an email interview that irrespective of the product innovations or the AUM (assets under management) garnered, a successful AMC, for decades to come, will and should be defined by the performance and ranking of its various offerings.
Indian equities have recovered from the correction earlier this year. Are markets now pricing in too much optimism?
On the contrary, we believe the time is ripe for India to outperform the Emerging Asia and the emerging market regions.
Since September 2024, we have been consistently underperforming the above regions (at one point by over 60 per cent) due to the lack of earning growth.
Earnings growth started coming back since the September 2025 quarter and has sustained since.
June was the first month when India outperformed the EA & EM regions and has continued to do so in July.
'AI is here to stay'
What are the three biggest risks that investors are underestimating today -- globally and in India -- and how should they position their portfolios against them?
One of the biggest risks globally is the escalation of the conflict in West Asia.
As of now, it looks contained; but if it were to escalate, oil prices will inflate and give rise to global inflation, which in turn will lead to demand destruction and deflation.
This can result in stagflation that may take years to repair.
Another global issue which also becomes a local risk is the super El Niño.
Already, Europe is battling record temperatures and forest fires.
In India, it is expected to impact the ongoing monsoons.
No asset class can survive such severe events if they were to last long.
However, an equity investor can use the volatility created by such events to average and get better returns in the long-run.
IMAGE: Dinshaw Irani.
Photograph: Kind courtesy Helios Mutual Fund
Where do you expect the next leg of earnings growth to come from over the next 12 to 18 months?
The next leg of earnings growth is bound to come from the MSME segment as the sectors representing the large-caps are either in highly penetrated markets (FMCG, staples, etc), in sectors that are going through a transition (IT due to AI, Autos due to EV, etc), or cyclical sectors (commodities, etc).
The MSME sector is dotted with sectors/companies that are the biggest beneficiaries of the India growth story like outsourcing plays (auto ancillaries, precision engineering, textiles, etc), new age companies (food tech, fin tech, logistics, etc) and pure domestic growth plays (PLI beneficiaries, Consumer discretionary, capex beneficiaries, etc).
Is the global rally in AI-related stocks over?
AI is here to stay and will establish itself deeper into our day-to-day usage.
The valuations can always be argued but the use case for AI is established.
This valuation discovery may lead to some choppiness, but does not blunt the case for AI.
Irrespective of whether investors cash out of AI-related stocks or not, liquidity normally chases growth.
In terms of earning growth, India may not be the highest growing market; but if we vein out the semiconductor plays in the region (TSMC in Taiwan and Samsung & SK Hynix in South Korea), India's growth starts looking attractive. Thus, we believe India should be and attractive markets for FPIs.
Have investors missed the bus as regards the Indian IT pack?
It is best for the investors miss the India IT pack bus as we believe with the adoption of AI, our IT services companies' revenue models will have to undergo a reset, which may in turn impact their potential for earnings growth.
What will define a successful AMC over the next decade?
Irrespective of the product innovations or the AUM garnered, a successful AMC, (as was the case in the past) for decades to come, will and should be defined by the performance and ranking of its various offerings.
The sole aim of an AMC is to generate alpha for its investors by beating their respective benchmarks.
Helios is one of the youngest AMCs in India. How are you preparing your business for a future where AI, passive investing and personalisation reshape wealth management?
The best way to prepare for an ever-changing future is aspire to consistently deliver (which is the aspiration of all fund managers) benchmark beating returns.
Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this article to influence the opinion or behaviour of the investors/recipients.
Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.
Feature Presentation: Rajesh Alva/Rediff
