Sameer Dalal Advocates Long-Term Focus Amid Mixed Earnings Season
Sameer Dalal, CEO of Natverlal & Sons, advocates focusing on long-term structural trends over quarterly earnings noise. He remains optimistic on banking sector expecting loan growth acceleration from 12-13% to 15-17% range, while highlighting consumption sector challenges with Avenue Supermarts showing 2-3% SSSG growth amid competition from quick-commerce platforms. Dalal sees opportunities in fast fashion, QSR, and automobile segments showing early recovery signs.
*this image is generated using AI for illustrative purposes only.
Market participants are increasingly looking beyond quarterly earnings volatility to identify India's next structural growth opportunities, according to Sameer Dalal, CEO of Natverlal & Sons. Speaking during the ongoing earnings season, Dalal emphasized that current market optimism stems more from medium to long-term demand trends rather than headline quarterly results.
Banking Sector Outlook
Dalal maintains strong conviction in the banking sector, though his optimism is not based on quarterly performance but broader growth cycles. He acknowledges near-term pressure on net interest margins due to rate cuts but believes the longer-term trajectory remains favorable. The CEO expects profitability improvements as loan books expand and deposit repricing gradually reduces cost of funds.
| Current Performance | Projection | Timeline |
|---|---|---|
| Loan Growth Rate | 12-13% | Current |
| Expected Growth Rate | 15-17% | Next 6-12 months |
| Valuation Status | Closer to fair value | Relative to NBFCs |
Despite valuations approaching fair value, Dalal considers banks attractive relative to several NBFCs. He believes loan growth acceleration toward the 15-17% range over the next six to twelve months could trigger sector rerating.
Consumption Sector Challenges and Opportunities
The consumption theme presents a nuanced picture, with traditional retail facing headwinds while select segments show recovery potential. Dalal highlighted Avenue Supermarts as an example, noting healthy headline revenue growth but subdued same-store sales growth (SSSG) of 2-3%. For fixed-cost-heavy retail models, SSSG becomes a critical performance metric.
Traditional retailers face mounting pressure from quick-commerce and food delivery platforms including Swiggy, Zepto, and Zomato. However, Dalal remains constructive on specific discretionary segments showing early demand recovery signs:
- Fast fashion retailers
- Quick Service Restaurant (QSR) chains
- Automobile sector
Once SSSG recovers after nearly two years of weakness, these segments are expected to lead consumption-driven growth and experience meaningful rerating.
Value Retail and Premium Positioning
Regarding value retailers such as V2, Vishal Mega Mart, and Baazar Style, Dalal expects eventual benefits but not immediate gains. He anticipates the first wave of incremental consumer spending to favor premium segments, as consumers with additional disposable income typically upgrade lifestyles rather than increase basic consumption.
| Retailer Category | Current Valuation | Growth Expectation | Timeline |
|---|---|---|---|
| Value Retailers | Optimism already priced in | Requires consistent SSSG | Multiple quarters |
| Premium Segments | First beneficiary | Lifestyle upgrades | Near-term |
Individual Company Analysis
Nykaa represents an interesting opportunity given its exposure to both value and premium segments. Dalal acknowledged the advantage of its online-heavy model, which offers strong operating leverage if growth accelerates. However, current valuations remain a concern, with most positives already factored into the stock price.
Poonawalla Fincorp recently reported impressive AUM growth, which Dalal attributed to the low base effect and improved capital access post-acquisition. While sustaining 70.00% growth may prove challenging, he sees potential for 30-40% annual expansion, possibly doubling the loan book over the next couple of years. Valuation concerns persist, with the stock trading at approximately three times price-to-book ratio.
Investment Strategy Framework
Dalal's outlook suggests selective opportunities across banking and consumption sectors, with investor success dependent on careful stock selection. Key factors for identifying winning investments include:
- Sustained earnings momentum
- Valuation comfort levels
- Ability to convert macro tailwinds into consistent SSSG growth
- Demonstrated profitability improvements
The CEO's approach emphasizes patience and focus on companies capable of translating broader economic trends into tangible business results, rather than chasing short-term quarterly performance fluctuations.
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