May 02, 2013, 01.33 PM IST | Source: CNBC-TV18

Overweight on India; consumption story intact: Aberdeen AMC

Adrian Lim of Aberdeen Asset Management continues to remain overweight on Indian market, with a positive view on consumer staples sector. He believes the India consumption story is very much intact.

Adrian Lim

Sr Investment Manager, Aberdeen AMC

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Adrian Lim of Aberdeen Asset Management continues to remain overweight on Indian market, with a positive view on consumer staples sector. He believes the India consumption story is very much intact. 

"There is a lot of good quality growth in the market despite the falling gross domestic product (GDP) numbers over the last year or so. So, although the short-term has been encouraging, our long-term position has been unchanged," he told CNBC-TV18 in an interview.     

Commenting on one of the fund house's top India holding, Lim says he would advise long-term investors to stay invested in Hindustan Unilever.

Shares in Hindustan Unilever were up on Tuesday, after parent Unilever Plc, along with Unilever NV, made an open offer to acquire 22.52 percent of the company at Rs 600 a share, a premium of about 21 percent over Monday's closing price. The stock rose as much as 20 percent in early trade.

Lim feels Rs 600 a share is not a good price for long-term investors of HUL.

On Infosys , Lim says he is looking for some changes in the way the IT major is being organised. He says Aberdeen is holding on to Infosys so far because of its strong cashflow. 

Below is the edited transcript of Lim’s interview to CNBC-TV18.

Q: Have you changed your stance on India in any way in the last few weeks given that commodities have started coming off which seems to have put India in a slightly more favourable light to a large number of global investors?

A: If one looks at commodities market softness, one can see that if they’d get full transfer of some of these savings, the cost pressures on quite a few operators in India should begin to alleviate. Our stance remains overweight. Broadly in the market, there is a lot of good quality growth despite the falling gross domestic product (GDP) numbers over the last year or so. So, although the short-term has been encouraging, our long-term position has been unchanged.

Q: Let me ask you about a few of your top holdings because you would have got a pleasant surprise on Hindustan Unilever (HUL), a stock which you hold. How would you approach that situation as a long-term holder, will you tender or will you weight it out?

A: The key phrase is ‘long-term holder’ and although it is quite nice to see the share price recover to almost its highs within the last 12 months, for long-term HUL stock holders, it has been quite a ride in the last six months. We have seen the price fall dramatically when the royalty hikes were introduced late last year and now we see a very dramatic recovery during these last few days as well.

It doesn’t change the long-term view. We like consumer staples market in India, it has really got a couple of decades to go before it catches up to the Asian average in terms of penetration and consumption of the consumers. Unilever has got some very strong brands in India, they have been around for decades, it has a very extensive distribution network.

If you are a short-term holder, Rs 600 might be a pause for selling but as long-term shareholders we don't find it that compelling. At it stands, we will probably wait it out and have a look and see what happens next.

Q: So, are you saying that you would rather stay the course over the next few years with HUL because the growth story is strong or are you saying that if Unilever PLC gives you a more tempting price then you will consider it, Rs 600 is not good enough?

A: At this point in time, Rs 600 doesn’t look good enough but we have some time to look through things and these things are all dynamic. It also depends on where the market is as a sector. It also depends on what happens closer to decision date. So, we will wait and see what happens. But, at this point in time Rs 600 is not quite that appealing.

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