Axis MF equity head names top sectoral bets for 2025 – CNBC TV18

Shreyas Devalkar, Head of Equity at Axis Mutual Fund, which manages close to $36 billion in funds, outlined the key investment themes for 2025, highlighting sectors with long-term growth potential.

The renewable energy sector emerged as one of his top picks, driven by its steady growth and the ripple effect on transmission and distribution. “This place, in my opinion, is a long-term story for India and worldwide. It is expected to continue,” he said.

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Another major theme is electronic manufacturing services (EMS), where policy support, import substitution, and rising investments are driving growth. “The trade has started, and there is a lot of progression. Multiple companies are entering into it. This space will definitely play out, particularly with policy actions like PLIs (production linked incentives) and import duties,” Devalkar noted.

Government spending was the third area of focus, with sectors like defence already benefiting from policy support and order flows. Devalkar expects the trend to strengthen further. “Anything associated with slower spend in the first half is already reversing on the ground. Defence orders have been announced recently, and this is just one area of government spending.”

Devalkar also flagged a shift in the consumption space, driven by quick commerce. This, he explained, is disrupting traditional retail and FMCG players. The winners and losers in this shift will be interesting to watch.

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Electric vehicles (EVs) are also an evolving space, where price points remain a key consideration for mass adoption. “We are going to see different trends emerging, particularly in the two-wheeler segment and among vehicles priced under ₹15 lakh.”

On the large-cap front, Devalkar discussed the financial services sector, where credit growth remains sluggish due to elevated credit costs and rate tightening. He expects a revival in credit growth driven by fiscal spending and potential rate cuts in 2025.

Discussing the IT sector, Devalkar positioned it as a valuation-driven portfolio call. While growth has decelerated since 2022, earnings cuts have broadly stabilised. “The IT sector has been relatively less expensive based on traditional valuation metrics like free cash flow yield and dividend yield,” he said. Growth upgrades of even 1-2% in the next two quarters, he noted, could lead to stock reactions.

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Devalkar added that market commentary on deal wins, US interest rates, and spending trends will be critical for the sector. “We are watching out for macro changes, like interest rate progressions and policy shifts in the US, which could impact financial services and manufacturing sectors.”