Bullish on infrastructure companies: Porinju Veliyath

Porinju Veliyath, MD & Portfolio Manager of Equity Intelligence India told CNBC-TV18, "I expect dramatic changes happening in infrastructure sector in the country for the next many-many years. We all know stock picking is a big challenge in that sector when you talk about infrastructure. Most of the big old companies have gone like bankrupt and too much leveraged. However, at the same time when there is exploding growth happening in that segment don't underestimate the growth in infrastructure." "On old segments of infrastructure, unprecedented kind of activities are going to happen in next many years. Lakhs of crore worth of bids are going to be invited which companies are placed to execute them properly and who has got the proper balance sheet to do it and some of the leveraged companies will also benefit because there are multiple and positive aspects to this infrastructure story today," he said. "Most of them are leveraged; the interest rates are going to come down. It will further decline. India's interest rate will be one structural decline for next many years. That will help these companies one way. Secondly, more orders coming up, the marginal profits will go up. Thirdly, their operating environment is changing for better." "I don't know how many people are aware about a major change that has taken place two to three months back with legislation about the arbitrage proceedings. The biggest enemy of these companies was that they had a big problem of receivables. There will be some quarrel, somebody will go for the arbitration and arbitration proceedings which will take five to six years. Once you get it after five or six years, the party will go to the lower court for the stay. It will take another five or six years. That was a nonsense happening in this country for last many decades. Now that has changed. An arbitration proceeding has to be completed in one year. If somebody has to go to the court you cannot get it from a lower court in stay kind of things. You to go to a higher court something like High Court or equivalent. There is a commercial wing for the High Court which is functioning for these things. So, these are the major positive changes happening in this country like never before." He further said, "Infrastructure companies with this kind of exposures will be a major beneficiary of this kind of things happening. All round I am very bullish on the infrastructure companies but again there could be challenge in picking stocks. You have to compromise on certain aspects of these companies regarding balance sheet or management quality. However, never compromise on the execution capabilities. So, I feel there are many multi baggers emerging from the infrastructure segment."