Across the board, a lot of internet companies are going public. Do you like that space?
Some of the valuations for the new IPOs look quite stretched, especially in some of the technology names. There are no comparable plays and they may end up competing with global majors. So I would wait on the sideline and see how they perform. I am not in a hurry to jump in just because it is a fad right now. There are so many opportunities. If you look at comparables of companies which had IPOs and companies in the similar sector which are trading in the market with 20 or 30-year history, there is a significant discount. Today IPOs are in vogue and usually there is a huge pop up post IPO. We are not in a hurry to just get into some of these just because of a short-term gain. We are staying away unless there is something worth investing.
And what would you be doing with some of the pockets like IT that have run up and are sitting on premium valuations?
Our preference right now is domestic cyclicals. Outside the domestic cyclical story, the other theme that we have been playing is this China plus one story which includes things like electronics manufacturing, chemicals, some pharmaceuticals. So anything in that basket where we see strong earnings growth because of a)the incentives that the government is giving; and b)because of huge potential due to export opportunities. IT is seeing huge demand growth. We are very selective in that. We are not sure if this sort of spending will continue over the next few years. We will wait and watch but these are the broad sectors that we are looking at outside the domestic cyclicals.
