For the past 25 years Raamdeo Agrawal, Chairman, Motilal Oswal Financial Services, with his wealth creation studies, has helped investors pick up quality at a reasonable price – QGLP his mantra for picking stocks. In a CNBC-TV18 interview, he discussed the takeaways from their wealth creation study.

Share Market Live

NSE

“Wealth creation is happening in the midst of major volatility. Wealth creation in the companies is happening irrespective of what is happening in the market, so one should not bother too much about it particularly if you are an investor for the long-term,” he said.

According to him, everything is a surprise in the market. “In 25 years, successful companies have grown to unimaginable levels,” he said.

“Out of 500 companies, only 100 companies have created wealth faster than 9.2 percent which market did. So there were 100 wealth-creating companies out of 500 starting from 1995,” he said.

He believes valuations matter less than earnings growth in the long run. “Stock returns are slaves of earnings power and growth. In the very long run, valuations matter less. Valuations don’t matter when so much of expansion in every aspect of the company is bound to happen in the long run,” Agrawal said.

He stresses it is very important to understand the business of a company. “Once you understand the business then you can say if this is a good business or bad business. That is the core of the QGLP. Understanding the competency and integrity of the management is equally important,” he said.

On Shree Cement, he said, “Shree Cement has grown by 240 times in last 25 years.”

For entire conversation, watch the video

(Edited by : Abhishek Jha)

First Published:Dec 22, 2020 2:14 PM IST