Markets will reward growth, not just size: Helios’ Dinshaw Irani

How do you view the current state of the Indian market amid global uncertainties?

We have seen markets through scams, wars, sanctions, global financial crises and Covid. Despite all these disruptions, markets have delivered wealth over time. India remains in a sweet spot. With a young workforce, rising digital adoption and strong economic foundations, I believe the country can sustain nominal GDP growth of around 10%+ over the long term. Short-term concerns come and go, but the larger growth story remains intact.

What gives you confidence about India’s long-term growth trajectory?

The JAM trinity, Jan Dhan, Aadhaar and mobile connectivity, has transformed economic participation. We have near-universal access to banking, a robust digital identity framework and inexpensive data. Combined with a young and aspirational population, these factors create a powerful platform for growth.

Investors have been worried about employment and inequality. How do you see this challenge?

Job creation has to come primarily from private-sector capex. Government spending on infrastructure improves productivity, but when the private sector invests, entire ecosystems emerge around factories and manufacturing hubs. Encouragingly, many companies are talking about capacity expansion. If private capex accelerates, employment opportunities will improve significantly.

Mid- and small-caps have corrected recently. Is their growth story still intact?

Absolutely. Markets ultimately reward growth. Many mid- and small-cap companies operate in sectors such as platform businesses, auto components, precision engineering and consumer discretionary, where growth rates remain much stronger than those of traditional large-cap sectors. There will be periods of correction, but the long-term growth drivers remain intact. When money becomes dearer, it looks for growth. It does not go to a market merely for safety.

Foreign investors have reduced exposure to some large-cap names. What explains this shift?

Foreign investors have broadened their universe. Earlier, their focus was concentrated in a handful of large-cap companies. Today, they are discovering a much wider set of opportunities across mid- and small-caps. They are increasingly investing in businesses offering superior growth rather than simply buying size and liquidity.

Helios follows an “elimination investing” philosophy. What does that mean?

We do not select stocks. We reject stocks. We eliminate companies based on eight factors, covering industry structure, management quality, governance, accounting quality and valuation. What remains is our investible universe. This approach helps us find businesses that offer growth, quality and value simultaneously. The world is driven by AI. We are driven by EI “elimination investing”

What policy changes could help revive foreign portfolio flows?

Taxes remain a key concern for foreign investors. India should consider a temporary moratorium on capital gains taxes for new foreign inflows. Such a move could significantly improve the attractiveness of Indian markets and encourage capital to return.

There are concerns about slower growth in IT services despite the AI boom. How do you interpret that?

AI is not a bubble in the traditional sense. Unlike previous speculative cycles, investments are being funded largely by corporates and private capital. AI infrastructure spending is already contributing to economic growth, particularly in the US. Over the long term, AI adoption will continue to create efficiency gains and new opportunities. Having said that, we believe AI will be a big disruptor for our traditional large cap IT service players.

What is your key message for retail investors?

If you are looking at investing on your own, please take it as a full-time job. It is not a hobby and it is not a pastime.