Nikhil Kamath is still not looking to buy new-age internet companies such as Nykaa, Paytm, Zomato and others despite their strong correction so far this year. “I don’t like companies which do not make a profit, because I like valuing companies as a multiple of profit,” the co-founder of True Beacon and Zerodha told FinancialExpress.com. He added that it may not be right for anyone to factor in future growth before the growth has happened and value the company as if that were a certainty. So far this year, Nykaa is down 19.6%, Paytm stock has tanked 54% and that of Zomato has fallen 44%.
“The ecosystem constantly changes, there are new competitors and none of these companies have a really big moat. So I would remain sceptical even at the current valuations,” Nikhil Kamath added. He, however, does believe that at some point the new-age internet firm will become attractive enough for investors to dive in but cautions that might not be today.
Nikhil Kamath, while not being keen on internet stocks that are yet to turn profitable, is rather interested in a much-diversified portfolio at this juncture keeping in mind the various headwinds. Inflation, rate hikes, soaring commodity prices, and geopolitical worries are some of the risks that he sees for equity markets right now. “A combination of inflation, slowing growth rates, corporate margins coming down, and geopolitical issues added together are the biggest risks,” he said.
To counter the headwinds that are expected, Nikhil Kamath suggested a diversified portfolio with gold, equity, fixed income, real estate, and corporate debt. “If you are solo investing your money in equity that might be a tad bit expensive to have that portfolio. I would recommend increased diversification,” he added. Nikhil Kamath added that he has gone defensive with his own portfolio increasing gold allocation.
“I like the entertainment and travel space off-late because I think the opening trade is going to last in India for a couple of years,” Nikhil Kamath said. While adding that he is not keen on adding banks at this stage considering how much they have soared.