Infrastructure growth is important: ASK RJ

Bharat Shah of ASK Raymond James Securities, Wealth Management and Portfolio Services feels that capitalising on India's infrastructure is fruitful. He said, "Basically, the main thing is to capitalise on the burgeoning growth in India's infrastructure and it is a large area. Typically, infrastructure growth preceeds that of economic growth and is much more sustainable in its character because these are sticky businesses and you have a large area of business where there is long running opportunity."

The following is the full transcript of CNBC-TV18's interview with Bharat Shah.

Q: Do tell us what is the mandate of this fund and how you want to go about investing ?

A: Basically, the main thing is to capitalise on the burgeoning growth in India's infrastructure and it is a large area. Typically, infrastructure growth preceeds that of economic growth and is much more sustainable in its character because these are sticky businesses and you have a large area of business where there is long running opportunity.

Q: A lot of people believe that the stories are great and prospects are great, much of the upsides are already captured in the kind of the price run up increased in many of the infrasructure stocks. Would you be comfortable buying stocks even on a 2- 3 year prospective at this  level?

A:  Yes, I think there are a lot of opprtunities. In power also, power equipment, capital goods, logistic business, distribution business etc. Infrastructure builders and sales have good opportunity. And what we have seen is only the initial sign of the growth and change.

Q: With just a week to go to the Budget, give us some thoughts on what your expectations are?

A: I expect a reform process which is been on for last almost 15 years, and which will continue. And we saw last year in the Budget a lot of  thoughts being spelled out and new things being intitated, so I expect that to continue. And the progressive reduction in various taxes , the rationalisation and enabling of the infrastrucure. These are some of the key notes toward Budget now.

Q: Everyone has been talking about thrust in infrastructure and power policy. We have seen all those sectors blooming almost over the past  few months. But what are the other stories you will be watching out for?

A: Infrastucture is critical because it is the building block of the economy. An economy which is aiming to grow at 5% plus should necessarily have a strong infrastructure increase. That is vital. I think various other businesses- metal looks attractive, auto parts is another. Capital goods is very interesting, I think global pharmaceuticals, the companies which are taking pharma approach are good. These are all very interesting businesses and I think we got tremendous capability and tremendous global strength to benefit from this area.

Q: I didn't hear you mention cement in infrastrucure?

A: I said resources which will help in building infrastructure, so cement will be a part of it. I think cement is an industry, which after a long period of difficulty is now probably progressing. The demand supply is more or less even and now more increase in demand is likely to result in to balance shifting in favour of producers.

Q: You said real estate as well. Do you like the formations? There has been some initial noises in FDI, Its not been proved finally yet, so  do you find stocks to buy in that space?

A: There are not too many opportunities in this segment. In some cases you get a direct opportunity and in some other cases you may find it as a common opportunity with other businesses.

Q: You talk about under valued stories, that are showing good potential. Are you essentially looking at the midcap space there?

A: My  idea is not mid cap or large cap. It is catogorising, the idea is whether the business which is steady for given sizes and will it be bigger tomorrow or not. If it is a large business today and it is going to be larger, then that is interesting and if it is small business and it is going to be tomorrow, it is equally interesting. The idea has less to do with what it is in current sizes, its more to do with what is going to be  the future size. Is it going to be much bigger than what it was yesterday? So from that end there are a number of opportunities, both in so called large caps and mid caps.

Q: Do you see a lot of investors showing interest in slightly long term products now?

A: Yes, and apart from that, there are legal portofolios which essentially focus on capitalising on deep mismatch exchange between value and price. So, typically we are trying to apply private equity market concept to the public listed market.

We are looking for a few positions, do a thorough check on them. Buy them at a deep discounted value and hold till the full value is unlocked. So its almost private equity kind of an approach but apply to the public market. And focus portofolio and concentrate it, no more than ten stocks and you don't be very negligible to the portofolio and these are the key characteristics and we find a lot of interest in that.