Siddharth Oberoi, the Founder and CIO at Prudent Equity is more optimistic about green power than thermal power. "Future growth in the green power space, and notably in solar power, is tremendous," he believes.
Prudent Equity has picked some key beneficiaries from this green power like Waaree Renewable, KPI Green Energy, Swelect Energy, and Suzlon Energy, he says, adding the smart meter opportunity is huge.
With 27 years of experience in the capital markets, participating in several bull and bear cycles, Siddharth Oberoi is yet not bullish on IT businesses as he still believes there is a growth and valuation mismatch.
Q: Your take on the power sector given the significant changes over the last decade?
If we are talking about thermal power in the current climate because of a nationwide electricity shortage, all power plants are currently operating at maximum capacity, which is good news for the power sector.
However, we are more optimistic about green power, which has become the new norm. Future growth in this industry, and notably in solar power, is tremendous. It is also less expensive and more effective. Major sums of funds have been invested in solar power by both major and small businesses.
Additionally, the industry will change with government assistance through PLI (production-linked incentive) in the upcoming years. We have picked some key beneficiaries from this green power like Waaree Renewable, KPI Green Energy, Swelect Energy, and Suzlon Energy.
Also read: TCS bribe-for-jobs probe outcome: 16 employees fired, 6 vendor entities debarred
Q: Is it time to bet on the smart meters theme?
The smart meter opportunity is huge, the government has approved Rs 3,00,000 crore power distribution company reform schemes. The Ministry of Power intends to install 25 to 30 crore smart meters across India which translates into a cumulative opportunity size of Rs 60,000 to Rs 90,000 crore.
Companies in this industry have been consistently receiving orders, and their order books are loaded. We played the smart meter theme from Genus Power, a business that was on our radar for several years.
We continue to be positive about the businesses that manufacture smart meters, as well as several EPC players involved in their installation.
Also read: PLI scheme panel approves Rs 1,000 cr disbursement to electronics sector beneficiaries
Q: Which are the three sectors on your radar?
Infrastructure, real estate, and debt restructuring stories are the current sectors we are concentrating on. By allocating significant budgets and offering numerous incentives, the government has clearly placed a lot of attention on infrastructure and real estate.
In addition to these industries, our concentration is on debt restructuring because it is a space in which a lot of businesses are about to undergo a turnaround. Stress debt and restructuring will be very profitable in the future.
Q: Are you increasing exposure to the space sector that is expected to get higher funding in 2023 over 2022 when it has received $110 billion?
There was a time when the space industry wasn't a priority, but that is changing now. Companies are now seeing an increase in their space order books.
Some firms in the space industry, though, do not offer comforting valuations. Our exposure to this industry, however, is quite restricted. Astra Microwave Products was our pick in this sector whose order book in the space industry is anticipated to grow in the future.
Q: Have you taken any contra bets?
We've made some good returns on our investments in chemicals stocks. But for now, we're concentrating on debt restructuring, real estate, and infrastructure, all of which can provide outsized gain to the investors.
Q: Is it the time to start accumulating IT stocks?
We are yet not bullish on IT businesses as we still believe there is growth and valuation mismatch. We expect IT companies to deliver low single-digit growth in revenues in the forthcoming year due to weakness in discretionary spending by businesses overseas due to prolonged inflation and rate hikes.
Also read: IT earnings could rebound as US economic outlook stabilises: Hemant Kanawala of Kotak Life
Many companies from the mortgage, and BFSI sector overseas have contributed to this sluggish demand for IT companies in India.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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