Amidst the “Great Indian Festival” launched by the American e-commerce major Amazon, Vetri Subramaniam of UTI AMC says that the continued preference for online channel as opposed to retail in the United States has caused a dip in market capitalization for the retail segment which was built over the last 60-70 years.
In conversation with ET Now, Vetri Subramaniam, Group President & Head of Equity at UTI AMC said, “In the US, you saw the peak in terms of maybe formalisation of organised retail, maybe a decade or more ago and then thanks to the rise and continued rise of online and particularly Amazon, in very specifically, you are now seeing a decimation of the market cap that got created in organised retail over maybe six or seven decades.”
Asked whether India may see a similar kind of disruption, he said that India is a very different market. “When you look at the Indian context, keep in mind that the total value of the organised retail segment is still a fraction of the total value of retailing which happens in the country and therefore, there is scope. One could arguably make the case that the share of organised retail in this economy will continue to grow and the share of e-commerce will continue to grow as well,” the expert pointed out.
He believes that the midcaps are overheated now, and large-caps pose a very good opportunity.“What has happened is that the valuation in the midcap space have actually moved to a significant premium to the large caps. Now this is quite highly unusual, honestly looking back at the past it is not in line with historical trends that we have seen and typically the premiums in the past at least have tendered not to sustain…I would have to believe that the better opportunity today lies in large caps as compared to midcaps,” he observed.