BFSI Insight Summit 2026: Value Investing Works, but Stock Selection Is Key

Beyond Value and Growth, Price Still Sets the Terms

At the BFSI Insight Summit, fund managers argued that sound investing depends less on labels than on business quality, valuation and disciplined stock selection.

Intrinsic value matters more than an investment label

The central idea behind value investing is not limited to stocks labelled “value”. Rajeev Thakkar, chief investment officer for equities at PPFAS Asset Management, said investing ultimately means estimating a business’s intrinsic worth and comparing it with the price the market assigns it. Growth investors make the same comparison, though their estimates may depend more heavily on cash flows expected further into the future.

That difference in assumptions can materially change the risk of getting a valuation wrong. Investors who rely on distant growth expectations may need greater confidence in how a business will develop, while a focus on nearer-term cash flows can offer more visibility but may overlook longer-run potential. Neither approach removes the need to assess what is already reflected in the price.

Thakkar’s example of Infosys between March 2000 and March 2008 illustrated the distinction between business progress and shareholder returns: profits grew seven to eight times, while the stock price went nowhere. Strong growth, on its own, does not ensure a strong investment outcome when the starting valuation is demanding.

Conviction needs evidence—and an exit test

Prashant Jain, founder and CIO of 3P Investment Managers, said a detailed understanding of a business and its market cycle can help investors stay invested through periods of underperformance. His experience with public sector banks reflected this approach: concerns about asset quality, he said, were part of a broader cyclical stress affecting corporate banks, rather than proof of a permanent weakness unique to PSBs. He also pointed to the importance of strong liability franchises in supporting business sustainability.

But patience is not a substitute for reassessment. When an investment disappoints, Jain said, investors should examine the underlying business. If the original assessment is wrong, holding on out of conviction can expose a portfolio to lasting damage. The same distinction applies to technology: he recalled exiting Indian IT stocks around the dot-com boom, while still recognising the sector’s long-term relevance. The valuation question now includes differences in products and growth prospects among companies, not just the industry’s overall outlook.

Market-cap preferences can create concentration

Thakkar said large-cap stocks were trading at lower valuations on average than mid- and small-cap stocks, while domestic money had flowed into mid- and small-cap mutual fund categories even as large-cap funds saw outflows in some months. He cautioned against overlooking larger companies amid investor enthusiasm for smaller stocks, noting that the top 100 companies account for an estimated 65–70 per cent of the profits generated by India’s top 500 listed companies.

That comparison does not make every large-cap attractive or every smaller company risky. Jain said smaller businesses may offer opportunities not found among larger listed companies, but investors need focused research into fundamentals, sustainable growth and price. Lakshmi Iyer, group president for investments and MD and CEO of Bajaj Alts, similarly favoured a balanced approach, with exposure guided by business quality and valuation rather than index movements alone.

AI optimism also faces a profitability test

The discussion on artificial intelligence underscored why investors should not apply one valuation yardstick to every market. Jain said US activity has involved substantial investment in foundational infrastructure and large language models, while Indian AI activity has been more concentrated on applications. Differences in investment scale, funding models and the businesses being built matter when judging whether valuations can be sustained.

Iyer said investors should examine how emerging technology companies expect to become profitable, particularly when they are not yet generating profits. A share-price correction may reflect a temporary setback—or lasting deterioration. A discount alone does not establish value; the business outlook and the price paid must be assessed together.

Key Highlights

• Value and growth strategies both depend on comparing estimated worth with market price.
• Rapid profit growth may not translate into returns if investors pay too much upfront.
• Conviction should be tested against business fundamentals when an investment underperforms.
• Large-, mid- and small-cap opportunities require separate valuation and risk assessments.
• AI businesses need scrutiny of their route to profitability, not just their growth potential.

Investor Note: The summit’s message is a reminder to look beyond market labels and sentiment. For retail investors, a disciplined assessment of business quality, valuation and the reason for any underperformance can help distinguish a genuine opportunity from a stock that is merely cheaper.