New-tech businesses exciting, set to produce true multi-baggers, says Raamdeo Agrawal

The new-age tech sector is clawing back after the debacle of 2022 and are set to produce true two multi-baggers in the near future, Motilal Oswal Asset Management Company co-founder Raamdeo Agrawal told Moneycontrol in an interview on June 22.

“I think we should be hopeful that some of the businesses will scale up very rapidly,” he said.

A multibagger is a stock that flushes out over 100 percent returns in a relatively short period of time.

Payments major Paytm has gained 23 percent, fashion startup Nykaa  18 percent and online insurance aggregator PB Fintech has gained 6 percent over the past month.

Agrawal said the new-age companies have superior business models that leverage the power of digitalisation to fuel growth. These business models have the potential to grow 20-25 times over the next decade, the market veteran said, citing India’s abundant opportunities and the power of compounding.

“If these new tech companies grow at even 35 percent, in 10 years, they would become 20-25 times their market cap,” Agrawal said.

Also Read: Can Paytm quarterly numbers revive sentiment in new-age companies?

According to Agrawal, the rapid spread of internet-based digital and “phygital” models across the country gives new tech companies an advantage over other successful business models.

Phygital, a portmanteau of words physical and digital, is a marketing term for blending digital experiences with physical ones.

On the back of these superior models even if these companies generate 40-50 percent compounding growth, it will still be at a lower end, Agrawal said.

New-tech companies dominate the global indices, he said, adding except Warren Buffett-backed Berkshire Hathaway Inc, tech-oriented companies top the global list.

If the promoters of these companies continue to conduct themselves well, focus on building stronger competitive advantages (moats), and strike a balance between growth and profitability, these companies will experience significant growth, Agrawal said.

“If they follow these strategies, which is what they have been doing after the debacle last year, these companies will grow,” he said.