Akash Prakash, Fund Manager and Chief Executive Officer, Amansa Capital Pte. Ltd.
HIS CALL: No room for P/E expansion. Midcaps will deliver outsized performance.
His big investment idea: Watch for tax and policy changes from the government in 2010; they will spout investment opportunities.
One clear implication of the new direct tax code, in whichever form it gets implemented, is a narrowing of the tax differential for companies in India. Anyone paying tax at or near the peak rate will benefit hugely, while anyone paying MAT, or relying on area-based benefits, will lose out. Investors should bear this in mind. The desire to make capital investment a basis for taxation in the new direct tax code (through a proposed tax on gross block) should further sharpen investor focus on the underlying ROIC of a business, as low-return businesses will have to pay a disproportionate share of profits as tax.
(This story appears in the 22 January, 2010 issue of Forbes India. To visit our Archives, click here.)