scorecardresearchReal impact of interest rate hikes will be seen next year, says Shivam Bajaj of Avener Capital

Real impact of interest rate hikes will be seen next year, says Shivam Bajaj of Avener Capital

Updated: 29 Dec 2022, 08:20 AM IST
TL;DR.
In an email interview, he shares his opinion on India’s growth story, current valuations of stocks, and his future outlook, particularly about the next calendar. He also advises small investors to invest in both private and public equity to earn higher returns instead of relying only on fixed income instruments to beat inflation.
He expects a good bounce back in the international markets from March onwards

He expects a good bounce back in the international markets from March onwards

Indian markets continue to trade at a premium when compared to the emerging market peers, while private market and technology stocks witnessed a significant correction, believes Shivam Bajaj, CEO of Avener Capital.

In an interview with MintGenie, he also speaks about the edge he got from his higher education in finance at Babson College, Massachusetts, US.

He says that he is bullish on B2B, tech-enabled services, ed-tech and logistics and says that if invested at an early-stage, investments in these sectors can deliver exceptional returns.

Besides, he believes in the India growth story and says that capex cycle will soon revive on the back of companies announcing expansions. He also shares some key tips of investments for small investors.

Edited Excerpts:

Avener Capital aims to create the maximum value by promoting innovation and also through financial re-engineering. Can you tell us more on this?

At Avener Capital, our philosophy has always been to unlock maximum value for our clients and investors. Our operations spread over two key verticals - real assets and the emerging clients. In the real assets division, we follow the theme of financial re-engineering which aims to optimize the capital structure to unlock maximized value for assets that are under-levered and require additional leverage to make the most of equity value.

In the emerging clients vertical,we are working with numerous start-ups in the D2C, fintech and SaaS sectors, offering them advice to raise growth capital.In addition to offering financial advice, we often provide strategic advice as well. For instance, if a D2C company is operating in a specific segment wherein the total addressable market (TAM) is limited, we offer that client insights into starting new SKUs that may help them increase their TAM.

As major economies are believed to be headed for recession next year in the wake of unprecedented inflation and ongoing war in Ukraine -- what should retail investors in India look forward to?

The real impact of interest rate hikes on the growth of businesses will be seen next year. Markets are forward looking at the impact of the rate hikes and growth has been baked into the valuations. One can expect a good bounce back in the international markets from Q1 CY23 onwards. 

The Indian market has not seen much of a correction and continues to be trading at a premium compared to its emerging market peers. Private markets and technology stocks have seen a significant correction and I feel that liquidity will come back into these segments, maybe after a slight time lag post the S&P recovery.

You have studied finance at Babson College and now you invest in Indian markets. How did your finance training in the US prepare you for the role you have taken up at Avener Capital?

I think education teaches you how to think and analyse diverse situations. Studying finance and entrepreneurship at Babson equipped me with the tools and skillset to analyse different situations. The days in Babson also introduced me to the key principles of corporate finance. To be honest, I derive most of my learnings in finance from the continued on-the-job and on-the-ground exposure.

Would you like to give any advice to the young aspiring entrepreneurs, particularly in the space of finance?

Focus on enhancing your competencies in all aspects of finance. People often early on tend to be impatient and that impatience leads to make many wrong career choices. Think long term, pursue one area, master it completely before moving onto the next. Be an avid newspaper reader and ensure that you are fully up to date on Indian and global markets.

As you are an investor in startups, which are the sectors you are bullish about and in which sectors have you made key investments so far?

Personally, I am quite bullish on B2B tech enabled services in general as well as in the domains of supply chain management, ed-tech, logistics etc. I think these businesses if invested at an early stage can deliver outsized returns to investors.

A few sectors or companies that I have invested in include B2B services in the ed-tech sector and a community platform in the mental wellness space.

What is your future outlook about financial markets in the next calendar year and what advice would you give, particularly to small investors?

I firmly believe in the India growth story. Discretionary spending has witnessed a substantial uptick in 2022. Airport traffic and road toll revenue data have been impressive. However, the capex cycle in 2022 has been muted and has not come back to the pre-COVID levels yet. I foresee a revival of the capex cycle on the back of companies announcing capex plans for expansion.

In addition, India is in the process of decoupling from the world markets by becoming a more self-reliant domestic economy with the Make in India push in defence manufacturing. The government also has a sharp focus on making India a global manufacturing hub in renewable energy manufacturing.

To answer the second part of the question, I would advise small investors to invest into equities, both private and public. While fixed income instruments only help one beat inflation, equities will deliver the true breakout in terms of returns to the investors.

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First Published: 29 Dec 2022, 08:20 AM IST