Sundaram BNP Paribas mutual fund manages Rs 12,458 crore of assets spread across 13 equity and 23 debt funds. It is expanding its product portfolio by launching an energy fund and is now awaiting market regulator Securities and Exchange Board of India's (SEBI) nod for a theme fund with a focus on entertainment.
TP Raman, managing director, spoke to MC Vaijayanthi about the energy and infrastructure sectors.
What kind of opportunities do you see in the energy sector?
There is a lot that is going to be happening there and significant amounts of investment are expected from power generation to exploration of oil and gas. Expansion of capacities by the energy intensive industries are likely once energy availability goes up. It is difficult to guess the potential – but we can feel the latent potential.
What about the universe of stocks available in the sector and valuations?
There is plenty. It may look like that existing frontline stocks have already run up very much. But there are lot of downstream companies that would be available from the mid-cap, small-cap and even micro-cap segments. A whole lot of companies are going to be associated with the energy infrastructure build up. There would also be services companies associated with this that will come up. So, the current valuations are not a concern for us.
What about government control in oil and gas pricing and what are the risks and opportunities arising from high crude oil prices at present?
We have seen easing of controls in sectors like telecom. But today in telecom it is a free-for-all, and there is not much for the government to do. This would happen even in energy. Crude prices - it is all the more reason for people to step up efforts to ease that.
There is an overwhelming interest in the infrastructure sector. Is that going to push valuations higher and create risk?
It is a much bigger story and a much longer story. There are bigger opportunities that are yet to unfold in areas like water and irrigation for instance.
What has been the investor response to mutual fund investments in the current market rally?
Some investors have been booking profit in a rising market like this. But as a class they have learnt to keep apportioning a part of their investments into equities. So, it is not that they invest once and keep quiet. They keep coming back.
The way SIPs (systematic investment plans) are increasing across the industry is mind boggling. We are finding it very difficult to handle it from an accounting perspective. We are growing SIPs at 11-12 per cent on an average. The only problem is that logistics have not been able to keep pace because there are only one or two companies to handle the payment mechanism. Once banks also start acting as a platform, this will boom further.