With small-cap valuations turning more reasonable and earnings growth improving, Pratik Dharmshi, Fund Manager – Equity at Union AMC, remains constructive on the segment. He recommends focusing on quality businesses with sustainable earnings potential, avoiding the chase for recent outperformers, and maintaining a 5-7 year investment horizon while staying mindful of liquidity and volatility risks.
Edited excerpts on a chat with Pratik Dharmshi on small-cap strategy, valuations, earnings growth, investment opportunities, and the outlook for the segment.