Market veteran Raamdeo Agrawal, Chairman and Co-founder of Motilal Oswal Financial Services, has made a bold prediction: India's benchmark Sensex index could soar to 300,000 points by 2036. Agrawal, a prominent speaker at Groww’s 10th foundation event – India Investor Festival, firmly believes in the power of long-term compounding within the Indian economy.
India: A 'Ferrari' of Global Markets
Agrawal passionately describes India as the world's best hunting ground for multibagger stocks, likening the nation's economic trajectory to a 'Ferrari'. This comparison stems from India’s sustained market capitalisation growth, which has compounded at approximately 14 percent annually in dollar terms over the past two decades. In contrast, the US market grew at around 7 percent during the same period.
He drew a significant parallel with South Korea's KOSPI, both indices launched on January 1, 1980. While KOSPI stands around 5,000 points today, the Sensex has surged past 80,000, underscoring India's superior long-term performance. “Form may be temporary, but class is permanent. India is the way to go,” Agrawal stated, emphasizing India’s unmatched structural growth.
Identifying the Next Multibaggers
Agrawal's investment philosophy centers on identifying businesses in rapidly expanding industries within fast-growing economies. He highlighted an internal Motilal Oswal study, inspired by Thomas Phelps’ book 100 to 1 in the Stock Market, which found that nearly 20 percent of NSE 500 companies delivered over 25 percent annualised returns for a decade, becoming '10-baggers'. This figure significantly surpasses the S&P 500’s comparable 7 percent.
For Agrawal, the formula for discovering outsized winners relies on three core tenets: vision, courage, and patience. He stressed that maximum multibaggers emerge in the fastest-growing countries and industries. He pointed to two key areas for future growth:
- Capital Markets Ecosystem: India is adding nearly 30 lakh (3 million) new customers to its capital markets every month, with over 22 crore (220 million) demat accounts. Agrawal anticipates this figure could reach 50–60 crore by 2031–32, creating vast opportunities across brokers, exchanges, asset managers, and wealth platforms.
- Quick Commerce: Drawing parallels to the early days of telecom, Agrawal sees immense potential in India’s quick commerce sector. Despite the current cash-burn phase, he believes the underlying network effects could foster very large businesses, calling it a “Bharti moment” in reference to the telecom giant.
Strict Filters: What Agrawal Avoids
Agrawal maintains stringent criteria when evaluating potential investments. He completely avoids companies with a return on equity (ROE) below 20 percent and meticulously scrutinizes receivables cycles as a marker of business quality. “If return on equity is 9 or 10 percent, I do not even want to enter the meeting,” he asserted.
However, his biggest filter remains management quality. He warned against promoters with compromised governance standards, stating, “They will go to hell and take you along.” Agrawal also advocates for firsthand factory visits and operational observations over solely relying on management presentations.
“Whenever you are hitting a big one, you are mostly alone. You need conviction to stay with it.” – Raamdeo Agrawal
Despite his astute market insights, Agrawal candidly admitted to missing out on the significant rally in BSE shares, despite his deep understanding of the sector. “The stock went up almost 50 times and I did not make a single paisa,” he quipped, underscoring the challenges even seasoned investors face.