Raamdeo Agrawal, a renowned market expert, reflects on missing out on investing in Asian Paints over the years, despite being aware of its potential since the 1980s. He’s now exploring his "bruised blue chips" strategy—investing in well-established companies experiencing a downturn, like Asian Paints, whose shares have dropped by almost 30% due to slowed consumption growth in India. Agrawal believes that when investing in blue chips, the downside is limited and potential returns are high if the company’s fortunes improve.
He compares this strategy to the approaches of his late friend Rakesh Jhunjhunwala, noting the importance of assessing if a company can survive and thrive. For Agrawal, the focus is on the upside potential during recovery phases, offering returns of 25-50% annually.
Additionally, the discussion raises insights into the dynamics of the financial sector, which serves as both a wealth creator and a destroyer. Agrawal highlights Hero MotoCorp as a past blue-chip opportunity and contrasts today’s more competitive markets with the previously undervalued markets of the ’90s. Even though SEBI’s regulations aim to shift investments from F&O to the cash market, Agrawal believes substantial change is unlikely due to different investor mindsets.
Finally, Agrawal notes the resilience of today’s stock market, bolstered by retail investors, as a sign of stability. He emphasizes the potential of India to attract foreign investors if corporate earnings grow. Agrawal advises newcomers against speculation and highlights the importance of patience for promising returns.
Discover more insights from Raamdeo Agrawal in Mint’s article and consider which blue-chip companies you believe have potential for recovery. What company, like Asian Paints, would you regret not investing in? Share your thoughts!
