Look At Companies That Have ‘Right To Win’, Says Axis MF’s Jinesh Gopani

As the novel coronavirus pandemic spooks global markets, triggering fears of an economic recession, Jinesh Gopani urged investors to look at companies that have the “right to win” for the next 2-3 years.

“We’re looking at companies which have free cash to pay to employees in the next 3-4 months without layoffs,” the head of equities at Axis Mutual Fund told BloombergQuint in an interaction. “A good quality franchise run by strong management, ability to protect capital, people and asset quality is the company which will come out as a winner.”

Highlights:

• U.S. government has done enough to pump up financial markets without going to unlimited quantitative easing.
• If Asia and India are able to emerge from this crisis well, there will be significant amount of money coming in.
• There are talks of about $20 billion of stimulus and forbearance from RBI on the NPA front.
• Leave aside fiscal deficit target for the time being and go for soothing the economy.
• Daily wage earners, SME world and banking sector NPA problems have to be addressed to ensure businesses don’t run out of liquidity and they’re not caught in a bad asset quality cycle, which will freeze the market at ground level.
• We’ll be in a better shape if rural and semi urban parts of the economy—which involve 60-70 percent of the population—are able to avert this disaster.
• Everybody is expecting forbearance from the RBI, because if the salary class gets impacted badly then not only the corporate world but even banks will have to give some extension for riding this crisis.
• Avoid non-leveraged place, banks come under the leveraged place so be careful where you are putting money and avoid companies with high promoter pledge.

Watch the full interaction here: