Mkts may consolidate for next 1-2 months: Birla Sun Life

Excerpts from Markets Midday on CNBC-TV18 Watch the full show » Nifty BSE | NSE 10/02/12 Are Mutual Funds betting on Nifty?

A Balasubramanian, CIO, Birla Sun Life said the market had run up a lot since January 2009. "The markets need to assess the results season, the impact of the monsoons and the recent volatility that is emerging in the global market, our feeling is that the markets will largely consolidate in a range for a month or two months," he added.
Also read: Revised Sensex March 2010 target to 18000: Macquarie
Here is a verbatim transcript of the exclusive interview with A Balasubramanian on CNBC-TV18. Also watch the accompanying video.

Q: A lot of power companies or promoters are willing to or waiting to bring their power companies to the market, what kind of valuations will you justify, it's a sector where there are only one or two very big players like NTPC perhaps and Reliance Infra which has taken out a lot of its power generation and has become an EPC company, there is Tata Power, what kind of valuations will you justify for the budding IPOs if there are any?

A: The entire valuation for power as a sector, its purely on the basis ofwhat kind of revenues they are able to generate on the basis of estimated selling price both from the merchandise and assured kind of buyback which comes from the government. If we put both the business model jointly, some of these companies trading today in the market, as you rightly put it NTPC has got more than 10,000 Mw of power generations capacity is today being traded at 1.8-2 times price to book, so one has to price it at similar kind of valuations. NHPC is coming into the market and now they are pricing around 1.2-1.5 price to book, these are easy to do for some of these established players who have an existing power plant which is up and running and whatever fund raising they are doing now, that is mainly to increase the existing capacity. But some of the existing companies and we also need to evaluate not on the basis of only price to book, the management's ability to execute at a given time frame and I think this is the key in terms of assessing this.
Continued on next page ...