MANAGER SPEAK: Sivasubramanian K N, senior vice-president, equity, Franklin Templeton India
The fund seems to be riding on the bullish trend in banking stocks. Do you still see potential in them?
Our investments are in banks that have strong fundamentals and potential for future growth. We exit stocks when our target prices are met and we hold on till the valuations remain attractive.
You are positive on the chemicals and engineering sectors. What is the rationale behind this?
We believe the boom in housing augurs well for companies in the cement and paints sectors. We have invested in companies with good fundamentals and strong reach that can benefit from this uptick in demand.
Engineering is a diverse industry. The bright prospects of the industry are evident from the Index of Industrial Production (IIP) numbers and the rise in demand for automobiles as a result of cheap finance.
Cumulatively for financial year 2003, capital goods production was up 10.5 per cent compared to a fall of 3.5 per cent in FY02.
While part of the rise is attributed to the transport sector, other sectors such as engineering and construction have also played a role. This rise, coupled with an increase in non-oil imports, continues to bode well for the engineering sector.
What is your take on mid-cap FMCG stocks, given that the outlook on the large players is not too encouraging?
Currently the per capita income in India is around $550. But it is highly skewed due to inequitable distribution of wealth.
We should see the distribution becoming more balanced in the coming years as growth in the services and manufacturing sectors absorbs people.
When this happens, we should see incomes steadily rising and FMCG companies would benefit from the ensuing improvement in demand.
In the longer term, we remain convinced that the Indian FMCG sector offers good growth opportunities considering that the per capita consumption of most categories is still low as compared to the developed countries.
India is expected to be a trillion dollar economy by 2010. As the economy develops and living standards rise, the sector is likely to benefit.
