Low growth, increasing cost and market status insurance stocks weight: Amnish Agarwal

Prabhudas Liladhar Aminish Agarwal says, “They are all where they are very reasonably priced, but if you see four years ago five years ago, they were trading on evaluations like banks trading four and a half times in India.”

I’m a little lost to understand what is happening in insurance. The government is not supporting the area. Growth is not there. The competition is intense. Shares are underperforming. So, I always thought that insurance was a big picture. Indians are under insurance. The insurance premium will increase. The importance of life and health came back after Kovid. But I just see the data that is growth, profitability and mobility, they just don’t support. Why is it? I mean, who harasses this field, what is the big picture is so strong?
Amnish Agarwal: India has always been very strong. You look at any segment, we can say that we are consuming a fourth part, the average of the world is fifth to average so it is insurance or not, even if it is automated.
The big picture will look good. When it comes to it, its small-small-small-small-small-small, small, then if we look at the previous few years, you will see that insurance costs are also increasing.

And today, if we look practically, many insurance products they are not like your typical pure insurance products, many of them have found an investment that has entered.

And obviously, when the markets are not good, a little erosion occurs, so it has a little effect and if you look at life insurance companies five years ago, the kind of evaluation they evaluate, yes, today, they have become more reasonable.

Today, it is all where they have a very reasonable price, but if you look four years ago, five years ago, they were trading on evaluations like banks that are trading four and a half times in India.

So, yes, growth is low. Probably, the growth will come back. Valuation is as shaky as today three to four years ago, but it is not an area where you will see 20%, 25% growth and if you ask me, stocks will look absolutely protective, so reduce all of these stocks, if you see last month that this market is holding, it is like HDFC’s life.

So, from that corner, it looks good. But is it a segment that will grow very quickly or which will give you a very high -rise return? I think that didn’t happen.

But yes, at the current level, stocks look good. Practically, many of these stocks, they have improved the very reasonable levels. But it is an area that has not been well understood by investors for years.
But yes, if you are paying attention to protective stocks, many insurance stocks in these unstable markets, it looks reasonably good.

Apart from insurance, it looks like a ripe post that the improvement we have made in the market and will it be comfortable now deploying money?
Amnish Agarwal: Indeed, we do not have coverage on the insurance sector, so I can’t give you any name where shots are stagnant or many of these stocks we are ahead.

No, except insurance, what does the market look good right now after the recent fall?
Amnish Agarwal: The market, as I have said, may look quite stable and if you look at two buckets, you will see the external field, I am not very sure, because what is happening globally, what is happening, there is some time, or, I would say that the situation may be uncertain until there is stability.

So, if we want the home side, there are two big buckets. One is your capex and a consumption. Therefore, in the last four to five months, the items have begun to freeze, orders are coming. Will they increase by 40%, 50% like many companies in the past, I think it will not happen.

Whether they will grow at 10%, 15%, which seems likely, valuation is now more and more crisp in a rugged banana, and selectively a basket of capex that looks interesting to us. Another consumption, which is under pressure, but, I would say, reducing food inflation, reducing tax rates, and interest rates are also falling, so this basket is coming down and performance from them should start to come down in terms of full growth, maybe by the end of 1Q, so it is a basket where you can give 15-20%.

Therefore, these are the two baskets where I see no problem on the home front and when we move on both baskets during the year, I expect a reasonable return from the front line stocks.