Here's How Zerodha’s Nikhil Kamath Shortlists Companies To Invest

Once the choice of sector is made, the question of which stock to buy is then addressed, Kamath told BQ Prime in an exclusive interview. Stocks are bought with the intention of holding them for five to 10 years, he said.

"The basic idea is to pick sectors with tailwinds, and (then) the odds of getting lucky are higher," he said. "If I get a return of 15% a year, it’s good enough for me."

Kamath’s recent bet was in the gamified e-learning and e-sports space, with an increase in stake in Nazara Technologies Ltd.—a stock in which ace investor Rakesh Jhunjhunwala had once invested. Partnership companies associated with Kamath and his brother Nithin picked up 14 lakh shares of the company for close to Rs 100 crore, raising their stake to 2.7%, according to a stock exchange notification on Monday. Shares of Nazara Technologies have risen by over 11% since Monday.

"I think people under the age of 16 or 17 lack the patience to consume data the way we used to in our childhood," Kamath said, explaining the reason for the investment in Nazara Technologies. "They need data to be faster and more interactive in nature, and a feedback loop seems to be a game changer."

The banking sector also appeals to Kamath, who expects private banks to continue to raise their share of the overall pie in the coming years.  

But Kamath was quick to caution against retail investors copying his investment choices.

"I might buy something; generally, whatever I buy is with a really long-term perspective. I’m looking at the company’s journey over five to 10 years and trying to figure out how India can evolve over such a long period in this space. I don’t think that anyone should consider news about me buying something as a reason for them to buy," he said.

To be sure, most of the investments Kamath makes are not in the listed space, with most of his portfolio consisting of private companies. 

"I am a big fan of the India consumption story. If you look at precedent and look at what happened in China, I think beyond that $5,000 GDP per capita, their discretionary spend goes up exponentially. I think it is just a matter of time before we are there. So, everything consumption I’m a fan of," he said.

Kamath is also betting big on the potential for senior care in India. With fertility rates falling across the world, the percentage of the elderly is rising. There are already instances of medical tourism in India, but the next decade or two will provide several more opportunities in the healthcare space, he said.

Watch the full interview below