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ETMarkets Smart Talk | Earnings growth, ROCE and cash flows are key to identifying future wealth creators: Aditya Khemani
Economic Times 1 hr ago·21 Oct 2026, 4:00 am
Aditya Khemani, Head of Equity at Invesco Mutual Fund, argues that the key to finding future wealth creators lies in looking beyond just revenue growth. He suggests that investors should prioritize companies that demonstrate strong Return on Capital Employed (ROCE) and robust cash flow generation. These metrics ensure that a company is not only growing but is also efficiently using its capital and generating actual cash, which are critical for long-term sustainability.
Khemani emphasizes that for small and midcap stocks, investors must be cautious of financial red flags. He advises looking for a balance between earnings growth and cash flow, warning that high growth without strong cash generation can be a sign of underlying weakness. This approach helps in identifying companies that are likely to sustain their performance and compound wealth over time.
Looking ahead, Khemani remains optimistic about the long-term potential of mid and smallcaps, particularly in sectors driven by India's manufacturing push. He advises investors to focus on quality and fundamentals rather than chasing short-term trends. By focusing on companies with strong financials, investors can better navigate market volatility and capture the upside of India's growth story.
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