+ve on infra despite high valuations: Reliance MF

Here is a verbatim transcript of the exclusive interview with Sunil Singhania on CNBC-TV18. Also see the accompanying video.

Q: You have picked up a large kitty of money, have you chalked out your plans as to where you want to deploy it, which areas will get your focus first?

A: The plan is already ready, but a lot depends on valuations. Like all other schemes in which we have raised money earlier, we definitely would like to spread out the investments rather than just come in the market and buy at any price. So, there is obviously a plan. We remain quite positive and optimist on infrastructure space in India. The sound bytes which are coming from the government clearly point to the fact that infrastructure is going to be a focus area. Money is going to be invested with a 2-3 year perspective and it won't matter whether if its invested in the next 10-15 days or in the next one month. I think what is needed is a good quality portfolio and that is what we are aiming to do.

Q: For infrastructure in specific, would now then not be a great time to start pumping in all that cash because the valuations of these infra stocks look quite horrendous actually?

A: Valuations are not cheap, but nothing which has promised comes cheap. We have to recognize the fact that they are not cheap if you look at 2-3 months back prices. But if you see the valuations that these companies used to trade in the hay days, I think that is still quite cheap. The problem with most of these companies is that because we had 18 months of very tough financial environment where raising debt and equity was very difficult, a lot of these companies could not add to their order book because other companies were not expanding. Now, if you start factoring in the fact that the government is committed to the infrastructure space and a lot of companies have started to raise money, I think there is a lot of upside possibility in their earnings potential.

Q: In the next one month or so, given valuations, how much of that Rs 2,300 crore do you think you will be able to deploy?

A: We have already started deploying a fair bit. The good thing is that obviously valuations are not cheap, but a lot of these companies are looking at raising money and that gives us a lot of opportunity of picking and choosing. As and when the opportunity comes, we will start deploying. There is a big event happening next week which is the Union Budget and it would obviously merit to take a look at it before taking a stance. So, let us wait. Hopefully, in the next one, two, or three months, we would be fairly invested.

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