Devendra Singhal, Equity Fund Manager, Kotak AMC, says: “We are very, very bullish on the entire manufacturing space in the country and we are also hopeful of a revival in the overall consumption levels. Now, if you look at that space, together with the infrastructure development which is being happening and is likely to even capture further pace, I think we are bullish on these segments by and large therein and these are offering opportunities at every level for us to increase positions.”

It appeared to be a shallow and a very swift correction which happened in the market. Thanks to your community, there is a lot of liquidity coming in to the AMCs and they are, of course, deploying it and hence it is running out. Whatever shakeouts are happening are very sharp, swift and shallow. Where are you finding the most value right now in the listed universe?
Devendra Singhal: It is wrong to say that the market is focusing on the value side. I would say that wherever the market is finding growth and finding growth to be sustainable and the valuations are reasonable, there the market is moving up and that is where the segments which the market is basically wrapping up those names.

So, it is not value per se but I think in a market like India where the growth is always at a premium. So, wherever you are finding growth which is better than the market and the valuations are attractive, people are just going there.

Let us talk about the commodity universe, especially metal and mining companies for once. I would like your thoughts about. Do you see value in them?
Devendra Singhal: Right now, the commodity stocks have been beaten down and globally also you are seeing that there have been a lot of talks about economies slowing down there. So, to that extent, we are seeing the metal prices, especially the overall commodity prices, to be under pressure, be it metals, be it oil and gas and so. Now, for an economy like India, which is basically a user, more of a user of these commodities, we are finding it more useful to us. But overall if you look at the commodity side, they are still under pressure but it is definitely good for India.

Which part of the market are you most comfortable buying if the market goes to a corrective phase going forward?
Devendra Singhal: We are very, very bullish on the entire manufacturing space in the country and we are also hopeful of a revival in the overall consumption levels. Now, if you look at that space, together with the infrastructure development which is being happening and is likely to even capture further pace, I think we are bullish on these segments by and large therein and these are offering opportunities at every level for us to increase positions.

Consumer is interesting. Does it mean FMCG, QSR kind of restaurant companies? Because they have had very bad same store sales, very bad volume growth for the last almost three-four quarters. Is it time to make a basket approach there?
Devendra Singhal: Well, not maybe more urban centric but more on the rural centric because that has been one segment which has been under pressure for quite some time. I think with monsoons being pretty decent over the last three years and the fear for this year being bad in terms of monsoon, is also getting added. Together with the steps taken by the government, election spending which is happening and overall increase in employment in the rural economy, we are hopeful that we are towards the end in terms of whether degrowth is happening and we will soon start seeing growth happening on that count.Which end of the utilities? Do you like power generation companies, legacy ones or the renewables ones or transformer companies? How are you playing the utility theme?
Devendra Singhal: We are bullish on overall manufacturing and we are also seeing that India’s per capita GDP is now close to $2500. So, power consumption is going to increase all across. Now, to play this, you have various aspects. You could play capital goods companies, you could play utilities and there on. However, we do find that utilities currently with the kind of ROEs they have been generating, they are actually attractively poised or valued in the market for us to be there. So, that is one part of it. Both gas and power utilities look pretty interesting to us.

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