V Srivatsa, Executive VP & Fund Manager, UTI MF in an interview to CNBC-TV18 spoke about the government’s divestment plans, market outlook and the spaces the fund is upbeat on.
The government Monday cleared the sale of stakes in multiple state-owned companies. It will be offloading 10 percent stake each in PFC, SAIL, NTPC & NHPC, 5 percent in REC, 15 percent in NLC India, and 3 percent in IOC via offer for sale
Srivatsa believes the government should have gone the ETF way to reduce the impact on stock prices because of this news. Although this has been a regular feature of the government, it puts a lot of pressure on the stock prices of these companies, says he.
According to him, these companies could have launched another series of ETF and should have sold it in the market. It would have received good retail participation and government too would have got their share of pie and stocks prices would have been saved the blushes.
Talking particularly about REC and PFC, he says the house prefers to stay away from this sector. They are a direct play on power sector and there is decent amount of stress in the private sector, so one is not sure what kind of impact it may have in the next 6-12 months. However, fall in borrowing rates have helped these companies.
He is positive on the oil marketing companies because bulk of their profits come from marketing, which in turn is proxy to branded space. Therefore, although valuations are on the higher side, the prospects still look good. The fund is holding on to their bets in this space, says Srivatsa.The fund has also been positive on pharma in spite of bearing the brunt with regards to inspection etc, in the last six months but would still buy them at current levels, says Srivatsa, adding that there is still a decent value in them from the near-term perspective.