This Small Cap-Focused Fund Manager To The Wealthy Is Betting On These Sectors
Global pressures may weigh in on India even as local companies report "good numbers", Aequitas' Siddhartha Bhaiya says.
Aequitas Investment Consultancy is betting on infrastructure, energy, capital goods, and auto sectors to thrive in the medium term, according to the Managing Director Siddhartha Bhaiya.
While these sectors were neglected in the previous decade, their valuations are currently "attractive" and balance sheets are improving, Bhaiya told BQ Prime's Niraj Shah.
“These (sectors) were the darlings of the market way back in 2006-2007 (are now) completely forgotten as sectors," said Bhaiya, whose small-cap focused firm manages assets worth Rs 2,000 crore. The firm's clients include ultra high-net-worth individuals, family offices and foreign portfolio investors.
Bhaiya underscored the global pressures that weigh on Indian companies reporting "good numbers."
The global headwinds including potential recession in Europe and slowing U.S. and Chinese economies may point towards a “cautious” approach, he said. However, the fund is fully invested instead of sitting on idle cash, he said.
Bhaiya, who is betting on the oil sector, said that while the consumption of oil has increased, the exploration has stopped in the last decade due to ESG concerns.
“I think we've not invested in energy for a very very long time whether it is coal, whether it is oil," he said. "Oil discoveries (also) take a long long time to come in.”
Oil and gas prices may ease from current high levels, Bhaiya said, but it would still remain elevated bringing more investment into the sector.
“Even if you want to run your EVs, your need electricity which is either on gas or on coal," he said. "So these are all structure substitutes at the end of the day.”
According to Bhaiya, the Indian auto manufacturing sector will also cash in as demand increases and imports from China decline.
“Manufacturing in Europe is down and out with their energy costs. So we're (India) looking at exports to Europe and the U.S,” he said. Domestic demand too is very strong, he said
Bhaiya recommends investing in industry leaders in these sectors with global presence.
Watch the full interview here: