Deven Choksey expects 18–20% equity returns; spots potential in recently listed Jaro Education

Deven Choksey, Managing Director at DRChoksey FinServ Pvt, on Thursday said that Nifty50 stocks are likely to deliver a decent appreciation over the next few years. “I believe that equity on a sustainable basis has the potential to give you around 18 to 20 per cent return during the next three to five years from the current base,” the market veteran told Business Today.

He cautioned that mid- and small-cap stocks may remain vulnerable due to the heavy flow of initial public offerings (IPOs). “Mid- and small-caps are likely to remain vulnerable, mainly because a large number of IPOs are hitting the market. Many IPO investors, including institutions, tend to flip their investments quickly. We have seen this happen in cases like LG Electronics and more recently with Tata Capital,” he said.

“So I believe most IPO investors are flippers — they sell their holdings to buy into new issues or fresh papers in the market. This often leads to selling pressure on expensive mid- and small-cap stocks. Hence, if these companies are trading at high valuations, they may face both time and price correction,” Choksey added.

Among the recently listed companies, he expressed optimism about Jaro Institute of Technology Management & Research Ltd, also known as Jaro Education.

“We like one company that was recently listed — Jaro Education. This company has a very systematic business model in the education space. It has the ability to scale its business at a 35–40 per cent growth rate, primarily because it brings in new enrollments for institutions such as IITs, IIMs and MITs. In the process, it earns fee income equivalent to the total fee paid by students to these universities. This is where the company is performing strongly. It mainly focuses on post-undergraduate, postgraduate and skill development programs, unlike K-12 education, where it does not offer any solutions,” the market expert said.

“They are driven by this kind of opportunity and in my view, such companies should be considered for long-term investment. Never look at this company from a one- or two-quarter perspective, but rather over three to five years. I believe the promise remains relatively stronger in such businesses,” Choksey further stated.