Vinit Sambre, Head of Equities at DSP Mutual Fund, believes precision manufacturing and auto components are growth areas driven by global supply chain shifts. However, he warns that high valuations make it important for investors to be selective. He also remains positive on IT services, suggesting concerns over AI are exaggerated.
Vinit Sambre, Executive Director and Head of Equities at DSP Mutual Fund, has shared a cautious but optimistic view on several high-growth Indian sectors. While he sees strong long-term potential in precision manufacturing, industrial products, and auto components, he has issued a clear warning regarding the current high valuations of these stocks.
Sambre believes the optimism in the manufacturing and auto component sectors is well-founded. It is driven by global companies diversifying their supply chains and India’s increasing ability to handle complex manufacturing processes. He specifically pointed to the shift toward electrification and the move toward higher-value products in the auto sector as key drivers that will create new growth opportunities for companies in the coming years.
However, he cautioned that investors should not buy these sectors blindly. Because these stocks have seen their prices rise significantly, many are now trading at expensive levels. This makes the approach to investing more important than the sector choice itself. Sambre advises investors to use a bottom-up approach, which means focusing on the specific health of individual companies rather than just betting on the sector as a whole. For investors, this means looking closely at whether a company has a clear order book, strong execution history, and a healthy balance sheet.
Regarding the IT sector, Sambre dismissed the idea that Artificial Intelligence is an existential threat to the industry. While AI is disruptive, he views it as a tool that Indian companies can integrate into their work to become more efficient, rather than something that will replace their core business model. He believes that the market's anxiety over AI has been overstated and that there is still value to be found in IT services as discretionary spending recovers.
Sambre also touched on the power equipment value chain and the consumption sector. He sees clear demand in power equipment due to grid investments and capacity additions, but again, he noted that the sector has already become expensive. For consumption stocks, he holds a longer-term view of three to five years, betting on rising incomes and a structural shift toward premium products as the economy grows.
For investors monitoring these sectors, the key will be to look beyond broad themes. The difference between success and failure in these sectors will likely come down to company-specific factors like debt levels, the ability to execute on orders, and the discipline to avoid companies that are trading at prices far above their actual business value.