[India Property, Real Estate India] Enam bets on consumption, real estate sector

[Noida Property 0]

India Property

The Indian markets opened in the green this morning after a modest loss in trade yesterday. How will the markets pan out today? Manish Chokhani, Director and Dharmesh Mehta, MD, Institutional Equity Sales of Enam, in an exclusive interview with CNBC-TV18's managing editor Udayan Mukherjee, present their views on the road ahead for the markets and talk about the Enam India Conference.

Chokhani said the consumption theme within the foreign institutional investors (FIIs) were very powerful. “Macro themes have already played up in India," he said.

Chokhani added that he was positive about underperforming sectors like Real Estate and also expects Mundra Port to perform well going forward.
Enam plans to host a two-day India Conference in Mumbai and expects to have about 2000 one-to-one meetings during the conference. 

Enam also stated that it had closed USD 200 million QIP for Manappuram General Finance & Leasing.
Below is a verbatim transcript of their exclusive interviews on CNBC-TV18. Also watch the accompanying videos.

Q: How big is the turnout this time and how is it looking?
Mehta: It’s much bigger than last year obviously with India where it is today. It’s looking very exciting; people have made a lot of money in India so we can see many smiling faces here and we look forward to the next year.

Q: You have two interesting panels - one is on infrastructure and the other on consumer. These are the two big themes in the market and so far consumer has done well. Do you think the infra guys will suggest any kind of bullishness which might lead to outperformance from that space now?
Chokhani: Let’s wait and hear what they have to say. I don’t want to pre-empt.

Q: At Enam which one are you more leaning towards more now – infrastructure or consumer as a theme?
Chokhani: As a brokerage house we are serving four kinds of investors. There are large long-term pension funds, which have a longer-term orientation, then there are the absolute return oriented hedge funds which may have a shorter duration horizon or a higher return expectation, then there are the local insurance companies and then there are local mutual funds.

So everyone has a different time horizon. For most foreigners, the consumption theme has been very powerful. While some locals or HNIs here would find the local consumption themes expensive, for most of the foreign audience, consumption is why they are here in India and that’s what they want to play for the much longer-term. 

The flip side is, on infrastructure, the assets haven’t been coming up and therefore you are seeing depressed return on equities (RoEs) for the last three years. Unlike the 2006-07 boom where they had come up to speed and capacities had come, they went into investment cycle or an asset build out phase which all comes into effect in 2012 and 2013.

So like a Mundra Port which did brilliantly over the last two-three years, once it was up and running, we would expect to see a number of these companies performing very well over the years to come.

Q: Is the excitement in the secondary market now for the global crowd which is attending the conference or is it trained more towards the primary issuances from the government after the Coal India issue. Power Grid is open as we speak?
Mehta: The last excitement was of course Coal India which was a big one and even Power Grid will have a good excitement building around it. You will see the institution portion also subscribed very well in Power Grid.
The excitement right now of course is more on the government offerings but ultimately that has to flow down back to the secondary market and that’s why people are here to do a more countdown study saying which companies should they now go and buy when the markets have already run up to almost 20,000-21,000.
Chokhani: From an excitement perspective, over the last 15 weeks just Enam alone has delivered 15 transactions to the market which have all been successfully completed, whether it’s QIPs, IPOs or FPOs. That’s the primary market excitement which I haven’t seen in my very long career. There is literally a deal a week happening and we are just one of the players in the market.

On the secondary market, apart from what happened in Coal India on the primary side, Dharmesh and his team did an outstanding job even after it listed and we were overwhelmed with the demand that we saw for people buying in the secondary market as well.

The fund managers are now saying – ‘where do we get to invest ourselves into India. So while our funds have done well and returns from India have done well, is there a way now we can start buying stocks over here ourselves.’ To me that is really the sign of where India is right now, where the money manager himself is in a sense feeling left out despite having participated. 

Q: At this conference do you expect to hear a lot of focus on macro because the G20 meeting is happening and there has been much talk post QE2 about commodity inflation, formation of bubbles etc. Do you expect that kind of talk to surface from your investor end at the conference?
Chokhani: When we meet informally with the investors, these kinds of talks will happen. It’s very important that France is taking over the leadership of G20 and Sarkozy tends to be a lot more strident against the dollar. We would think over the next 12 months there is some move coming in the currency markets which is going to have an impact on equity markets all over the world, including in India.

From a conference perspective, it’s a service offering that we have to put out for investors. The aim is to get as many people from the investing side to meet as many companies. For example, just in this conference alone, we will have 2,000 one-on-one meetings which will happen over the course of these two days.

People have reached this conclusion that the macro for India is in good shape. Despite what happens to the world we will have our blips and our ups and downs but this is a country we want to own for the longer-term and therefore its now time to look for alpha over here that the big macro play for India has played out. Over the next 12-18 months can we go and find companies, in the middle part of India which is Bharat.

This time we have a very eclectic mix. The very largecaps are always there but we have tried to bring a lot of these midcaps and emerging companies as well into the conference. I am quite hopeful to see by the end of tomorrow what excitement levels are and which particular things are getting people more excited or not.


http://www.moneycontrol.com/news/market-outlook/enam-betsconsumption-real-estate-sector_498241.html

www.RealIndiaProperty.co.in

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Posted By Noida Property 0 to India Property, Real Estate India at 11/11/2010 12:00:00 PM