What is your view on cement?
Chakri Lokapriya: You raised a very good point which is if you look at cement companies in the last, let us say, seven years or eight years, they have had hardly any pricing power. Their price increases at best have been way below inflation and thanks also every now and then the government saying that oh, the cement prices should not be increased. And second, because there was competition, now you have two large players, but that is another reason which contributed to the lack of this market beating returns for cement as an industry. Now, we have to see with UltraTech and ACC becoming the two large players whether they will show some signs of pricing power.
What has been on your shopping list of late and where are you looking at taking some chips off the table?
Chakri Lokapriya: Clearly, everybody’s favourite is ours too which is that banking has done well. I think it will continue to do well. The valuations are in its favour. All those things that RBI has done, cutting rates 100 basis points, liquidity, reducing provisioning, all these help and banks valuations are still very reasonable. So, what is needed to take these banks up is with all these actions hopefully the earnings for corporate India will bottom out and start picking up.
On the other hand, companies like railways which used to be so boring a couple of years ago, have become so attractive with their growth potential. Titagarh is now talking about a 35% plus revenue growth and these are real orders and multiple sources of orders.
And defence has done phenomenally well we all know that, still there are pockets of defence because now defence has become such a fashionable theme worldwide, whether it is Bharat Electronics or Data Patterns these companies are still valuation-wise okay to their order book.
