'A 3-5-year outlook partially justifies mid-cap valuations'

Devender Singhal may have spent more than 20 years in financial markets, but his fire burns bright. This comes to the fore when he talks about the "excitement" of unearthing stocks "that others may be missing", especially during testing times. Having been associated with Kotak Group since 2007, Singhal currently presides over 28 schemes with assets worth Rs 50,678 crore, including the five-star-rated Kotak Equity Savings Fund and Kotak Debt Hybrid Fund. In this interview, Singhal shares his insights on market valuations. He believes that while large caps are reasonably valued, mid and small caps' higher valuations are justified by superior earnings growth if one has a three to five-year investment perspective. He also delves into his investing strategy and the outperformance of his Kotak Multicap Fund. How would you sum up your investment philosophy? Are there any stocks or situations that excite you when evaluating potential buys? I consider myself a bottom-up stock picker. I always look for the asymmetric risk-reward in the stocks I invest in. The idea is that for every rupee of risk that I put to work, I am looking at asymmetric returns. So, for every rupee of downside, I need to generate more than a rupee of upside. In a steady state, I continue to search for stocks that can yield higher returns than the overall market. Regarding market conditions that excite me more, I can honestly say that over the past two decades, there have been numerous such opportunities. Especially market conditions when