In an exclusive interaction with Finance Outlook India, Romil Jain, Deputy CIO & Fund Manager at Electrum Portfolio Managers, provides comprehensive insights into the evolving landscape of consumer discretionary investments and market positioning strategies for 2025. Drawing on his extensive experience in portfolio management and bottom-up investment approaches, he outlines critical market segments poised for growth while emphasizing the importance of value-driven stock selection and fundamental analysis. Romil also shares his expert perspective on navigating sector-specific opportunities in pharma, consumer goods, and mid-cap segments, highlighting how structural business advantages and growth at reasonable price (GARP) methodology can create sustainable value for investors amid changing economic cycles, tariff uncertainties, and evolving monetary policy landscapes.
Which consumer discretionary segments are poised for growth in 2025, and how should investors approach them?
We expect consumer discretionary to be a mixed bag in 2025. The retail sector is expected to do well, mainly value retail, due to better economic cycle and good rainfall. Jewellery, automobiles, travel and fashion may also do well going ahead. Further, we may see good performance from some of the new age businesses going ahead. Segments like QSR, paints, footwear etc, may grow slower. Investors should be cautious in approaching these sectors as valuations remain punchy in many cases.
How should investors position themselves in the face of increasing domestic consumption trends in 2025?
In many consumer categories like automobiles, consumer durables,etc India’s penetration is low vs other countries. Thus, there is a strong growth possibility over long term as per capita income increases. In view of increasing domestic consumption investors can look at sectors like auto and auto ancillary, select consumer durables and consumption segments as a basket. These business can do well over the long term.
Also Read: Electrum Portfolio Managers Launches AIF-Laureate, SEBI-Registered Category III Investment Strategy
What is your perspective on the Pharma sector’s performance in 2025, especially with rising global demand for generics, and how should investors approach this space?
Currently, the generic pharma sector is under some sort of uncertainty due to impending US tariff tantrums. However, CDMO/CRDMO and such niche opportunities within the pharma basket look good and investors should play a mix of generics and CDMO segments. We look at stable demand in generics, however higher growth is expected in CDMO segment over the long term. However, the market has largely priced in the strong growth expected in these sectors and valuation remains at top end in many cases.
What is your thought on bottom-up(security selection-driven) investmentapproach? Why it's is safe and reliable?
Bottom-up stock selection approach essentially helps to focus on individual stocks rather than follow macro cycles. It helps to take longer term view by focusing on the fundamentals of the company rather than analyzing macro trends. It is a safer and reliable option as the approach helps to invest in a structural business at a less favorable time thus giving advantage of lower valuation and margin of safety. Over longer term as earnings get delivered, stock will mean revert and later expand in valuation giving a strong compounding return.
With small-cap and mid-cap stocks lagging large-caps due to high interest rates and tariff pressures, how are you adjusting exposure to these segments to anticipate potential rate cuts or improved valuations?
We follow bottoms up investing and invest with a growth at reasonable price approach (GARP). We have reduced exposure to certain export-oriented sectors in view of US tariff situation and added stocks on the domestic side in sectors like power, IT, value retail, hospital etc. thus broad basing the portfolio. Any rate cut will help domestic business and we expect valuations to improve alongside earnings growth.
