Last Updated:
Here’s how Motilal Oswal Financial Services Chairman Raamdeo Agrawal thinks, chooses and prices his bets.
MOFSL Raamdeo Agrawal is as picky about price as he is excited by growth stories.
Raamdeo Agrawal has spent a lifetime chasing compounders and building a reputation for spotting stocks long before they become household names. In a recent conversation with CNBC-TV18, he pulled back the curtain on at least five habits that shape his approach. Here’s how Motilal Oswal Financial Services’ chairman thinks, chooses and prices his bets.
He Gets In Early
Agrawal favours the small, under-followed business where fundamentals are visible but the market hasn’t yet climbed aboard. His Balkrishna Industries anecdote is telling: “Today, Balkrishna Industries is a very famous company, a very large company. But when I bought it, it was Rs 100 crore company, and I bought it at 1 P/E (price-to-earnings), with that 40-30% return on equity, and there was no taker. I went to the company… They offered me rasgulla, and they told me the whole story. Then, we bought. The stock went from Rs 100 to Rs 1,200 in two years, we sold everything.”
Price Matters As Much As Growth
Agrawal is as picky about price as he is excited by growth stories. He admits he missed profits from Asian Paints because he would not pay the multiple it demanded: “When I wanted to pay 50, it was 20. So I didn’t buy when I want to pay 20, it became 25 and then finally, once I agreed to buy at 23 and again, my dear friend, he said, let’s wait for some more time. And it went to 90. So I never made a single penny out of that.” That mindset is why he uses the PEG ratio — price/earnings to growth — as a valuation filter. A PEG of one or less, he says, signals a share is priced in line with its growth.
Don’t Rely On ROE Alone — Add Quality Of Cash Collection
Return on equity is central. Agrawal looks for at least 25 per cent ROE, but he layers on operational checks. High ROE with poor working-capital discipline is a red flag: “Can he (the business) collect his money in 30 days? If you have a 25% RoE, but 100-120, days (to collect the dues), God knows what you are writing,” he warns.
Be Obsessive About The Business Story
Agrawal prefers to meet founders and management, to hear the story first-hand and understand distribution, product durability and management character. That boots-on-the-ground curiosity is how he separates transient tailwinds from sustainable competitive advantage.
Stick To Your Price Discipline — Avoid FOMO
He repeatedly stresses patience. Missing a multi-bagger is less painful than overpaying for the next hot stock. The Asian Paints episode is a cautionary tale: you can admire a business endlessly, but if valuation doesn’t work, the trade isn’t worth it.
Click here to add News18 as your preferred news source on Google. December 12, 2025, 12:49 IST
Read More