Looking into the future and predicting market outcomes, especially in the midst of a pandemic, is challenging to say the least. In the current scenario, visibility into the future of businesses is hazy at best. DSP MF came up with an assessment concept “Vision 20/20” to envision the future of business. 20/20 in medical parlance refers to the sharpness of vision. The first 20 is what the person being tested sees 20 feet away from him/her and the second 20 is what a person with normal vision should be able to see from 20 feet away.
Re-purposing this “Vision 20/20” concept to investing, DSP assigns the first number (out of 20) to their investment team as analysts and fund managers and their level of visibility when assessing our portfolio companies. The second 20 represents the idealistic and impractical ‘perfect’ market participant.
DSP MF employed 3 lenses when evaluating the future of investee or potential investee businesses (and by extension, its funds that hold those businesses) bucketing it into Vision 15/20, 10/20 and 5/20. It does not have a Vision 20/20 lens as it believes we are in uncharted territory and unable to have 100% clarity regarding future trends.
Vision 15/20 – High visibility on business model, industry landscape and customer trends
Personal mobility will see a trend with people in mid-high income brackets would prefer to buy cars/2 wheeler instead of using services like Uber/Ola. The demand for second hand vehicles has picked up with a focus on low-budget, mass market vehicles.
Similarly, there is a shift to online buying with many shoppers experiencing it for the first time. Shopping apps and online healthcare and medicines have seen a huge spike in demand.
Affordable housing could see a pickup as the government is likely to focus on providing better living conditions to poor people. Work from Home is likely to continue in some way, shape or form. This could create disruption in rent seeking stories (REITs, Commercial Real Estate). The new work model also suggests an internet boom benefitting telecom players and could also translate into increased consumption of ready to eat packaged foods categories.
Export driven pharma companies are well positioned to leverage the ‘Self Reliant India’ theme. Hand Hygiene products (Hand sanitizer/ hand wash) have seen ~10x jump in penetration levels. Unavailability of social security, the high cost of healthcare and low penetration of protection policies in India may drive the demand for both medical and term-life insurance.
