Raamdeo Agrawal emphasized that the current high valuations, particularly in smaller and mid-sized companies, are driven by the anticipation of substantial earnings growth. However, he also cautioned that there is a risk of these valuations falling if these growth expectations are not met. Additionally, Agrawal pointed out that the availability of equity capital is no longer a concern for entrepreneurs due to the ample liquidity in the equity market.
According to Agrawal, the key issue lies in the demand rather than the availability of capital. He believes that the influx of retail investors into the stock market will continue to rise, benefiting the mutual fund industry in the process. Agrawal predicted that the assets under management of equity mutual fund schemes could potentially reach Rs 100 trillion solely within the next 6-7 years, showcasing significant growth potential in the sector.
Agrawal expressed his confidence in the growth prospects of asset management companies (AMCs) due to their ability to deliver substantial yearly growth rates of 25-30%. He acknowledged the potential risk of regulatory intervention impacting margins but highlighted the overall growth potential of the AMC sector. Motilal Oswal AMC recently reached the milestone of Rs 1 trillion in assets under management, with a sizable portion divided between active and passive mutual fund assets, as well as portfolio management and alternative investment fund assets. The company aims to further enhance its capabilities to manage a larger asset base and secure a spot among the top five fund houses.
Navin Agarwal, Group Managing Director at Motilal Oswal Financial Services, mentioned the company's strategy of expanding both its physical presence and digital infrastructure to improve its market reach. As the company aims to strengthen its position in the market, Agarwal highlighted the importance of building on their foundation to capitalize on industry momentum and achieve significant growth in the near future.