Q$3.$ A group of young bright students of WUBNI having learnt the mechanies of valuation and equity investing were having an interesting discussion in the corridor. An administrative officer who was passing hy overheard the conversation and was intrigued and fascinated by it and recorded the following:Ananya: I read in the paper about GST collections in April was Rs$.1\mathrm{.}2$ lakh crores, and at an all$-$time high and increasing month on month, economy is doing very well and we are one of the fastest growing large economy. Twin deficits are in control. Except election uncertainty, everything is hunky dory.Shivam: That is good but how does it help companies and markets, unless the profitability also go up$?$ Saara paise to Sarkar tax mein le leti hei $($the Government takes all the money in taxes$),$ profit will not increase. See tas on petroleum products.Arushi: Higher growth means more profits for companies and hence greater investment opportunities for the investors to invest and carn handsome returns and grow their portfolios.Ashwin: Guys all that is fine but in investments and portfolio management we need to look at the future? Isn't it$?$ It is not that simple that profits are increasing and will continue to grow as GDP is rising.Tejasva; There are companies where profitability has taken a hit because of global situation, high interest rates and developments in Al$.$ Unemployment is quite high, inflation is also going up$,$ purchasing power is decreasing.Ronit: You see the performance of equities, it shows that markets have done well and is poised for future growth. Markets are surely forward looking. I think Nifty will reach $25000$ by Diwali.Deepta: What $25000?$Shrishti: Ronit why not $30000?$Ronit: It can, why not, FIls are buying, India is the only stable and growing economy, large investible universe of companies, large democracy, positive demographics and a whole lot of positivesAt this point Nilesh chipped in Nilesh: All that is fine but nobody is talking about valuation. We had learnt that an investment is great only when bought at good price. Today Indian markets I was reading was one of the most expensive markets in the world and overall market cap of Indian markets is close to $$5$ trillion.Ashwin: Market ko goli maro. T have bought Zomato at $150$ and it will go to$400.$ Price has already gone up by $30\%.$Shristi: Yes we did the valuation of Zomato in the class. What assumption you are making to reach a figure of $400?$Ashwin: My gut feelingDeepta: It is good for some decisions but not for investments. You should do your homework before investing. What is the kind of growth you expect?Shivam: Margin of safety, you remember guys in value investing.Yes three most important words in investments some of them saidNilesh: Anybody remembers those criteria told by Benjamin Graham in the class.Arushi: Arre those are only bookish, real life is different.Ashwin recollected one of these price is less than book value and margin of safety was debt to equity has to be less than $1.$ Arre aur kya criteria hei? $.....$Raimma said markets are expensive and trailing $12$ month PE of Nifty is more than $22.$ Watch out guys?Kitna darti hei?Few of them said Dar ke aage jeet hei.The phone rang that had to be answered and he left. But he was wondering as to how much these students know and how much they understand about investments and markets.Based on the above discussion, as a portfolio manager, articulate your investment strategy for equities in India and also describe value and margin of safety criteria as enunciated by Graham. Can this be applied in current market situation? If not then what other criteria would you like to adopt?