Varun Manmohan Kapur

Now market share is sticky, owing to the number of intermediaries involved and the ‘trust’ factor, once created gets difficult to displace in the short term. So large caps with large market shares in their segment’s pre-pandemic are expected to yield the benefits of such enhanced market share over the medium term. Certainty of cash flows, vendor payments, debt servicing, employee retention will all play to their benefit. These outsized market shares owing to the pandemic can throw off conventional valuation matrices like P/E, EV/EBITDA as ‘growth’ (despite their already large base) is expected to be high and disproportionate to levels of economic recovery over the medium term.

Varun Manmohan Kapur says that the above simple yet fundamental theory of investing in large players with high market shares in their respective product segments can continue to result in index beating equity returns over the medium term. The relative degree of safety and higher standards of governance going into these stocks also ensures that the risk taken is moderate with an additional steady income stream in the form of dividends.


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