360 ONE’s Mayur Patel Highlights Opportunities in Financials, Telecom, and Renewables

India’s economic landscape is undergoing a significant shift, presenting compelling risk-reward opportunities for investors. Mayur Patel, President & Fund Manager – Listed Equity at 360 ONE Asset Management, identifies financials, telecom, commercial vehicles, and integrated solar manufacturing as sectors poised for growth, despite current market valuations.

Macroeconomic Improvements and Market Architecture

Patel notes a material improvement in the macroeconomic architecture, citing the completion of the Union Budget, the establishment of the US-India trade deal, and easing liquidity conditions. The Reserve Bank of India’s (RBI) rate cuts and subsequent surplus system liquidity, coupled with a rebound in credit growth to 13-14% with further acceleration potential, are bolstering the economic outlook. Economic Times

Supportive factors include income tax relief, Goods and Services Tax (GST) rationalization, and the anticipated pay commission cycle, all expected to boost disposable income and urban consumption. Externally, moderating capital account pressures and trade agreements with the US, UK, EU, and UAE are enhancing external trade visibility.

Sector-Specific Opportunities

Financials

Despite subdued recent earnings due to slower credit growth and margin compression, Patel believes the financial sector is poised for a rebound. With improving liquidity and the nearing end of the rate cycle, margin pressures should ease, and credit growth is expected to re-accelerate. He suggests private banks offer reasonable valuations relative to their return on equity (ROE) potential, while public sector banks, after recent outperformance, present a less favorable risk-reward profile.

Telecom

The telecom sector has transitioned to a more stable three-player structure following government-backed relief measures. This shift is expected to improve industry economics, allowing for calibrated tariff hikes, particularly given India’s world-leading data consumption of approximately 28 GB per user per month. Recent tariff increases have already improved margins and cash flows. The rollout of 5G technology necessitates network densification, creating a structural growth lever for infrastructure players.

Commercial Vehicles

Policy support, including a GST reduction from 28% to 18%, has stimulated demand in the commercial vehicle sector. A significant portion of the existing fleet comprises older vehicles, creating a substantial replacement opportunity. Original Equipment Manufacturers (OEMs) are experiencing above-peak margins and ROEs, yet valuations do not fully reflect the potential for a multi-year upcycle.

Integrated Solar Manufacturing

Patel identifies integrated solar manufacturing as a scalable investible opportunity, driven by a clear policy roadmap promoting phased indigenization from modules to cells and eventually to wafers. Companies demonstrating proven cell efficiencies and backward integration into wafers and ingots, alongside expansion into batteries, inverters, and allied electricals, are positioned to build durable competitive advantages. Economic Times

AI Disruption in IT Services

Patel cautions that Artificial Intelligence (AI) is fundamentally altering the economic structure of IT services, posing a genuine disruption risk to Indian firms. He emphasizes that AI, particularly agentic workflows, targets the core effort-based revenue engine, including coding, testing, maintenance, and support. Companies must demonstrate that AI expands their addressable opportunity rather than simply compressing billable effort. Inertia and reliance on traditional delivery models could lead to structural margin and growth erosion. Economic Times

Renewable Energy and the Energy Transition

India’s 500 GW renewable energy target by 2030 appears achievable, with solar additions accelerating sharply. Demand could increase due to expanding data center capacity and the potential of green hydrogen as a structural driver. Patel highlights integrated solar manufacturing as the most scalable investible opportunity, driven by policy support for domestic production.

Risk Factors and Market Valuations

Key risks remain crude price volatility, which could reintroduce macroeconomic pressures, and AI-led disruption within legacy IT services. Patel notes a divergence in valuations, with the Nifty trading near 3.5x price-to-book, while the smallcap index has corrected back toward historical median valuations. He suggests risk-reward appears more balanced in large caps and attractive in small caps, while midcaps remain relatively expensive.

About Mayur Patel and 360 ONE Asset Management

Mayur Patel is the President & Fund Manager – Listed Equity at 360 ONE Asset Management (formerly IIFL Asset Management). He has 18 years of experience in the investment research and management domain, including previous roles at DSP Investment Managers and Spark Capital. IIFL Asset Management LinkedIn