Post the monetisation policy, would stocks like L&T perhaps be better bets?
L&T continues to remain as strong as ever and the prospects always remain bright. The question is the amount of execution that is required to be carried out whether one L&T is sufficient. In my view, India probably needs five to six L&T types of companies. In order to execute the kind of infrastructure projects that the government is talking about and unfolding one after another, there is a good amount of opportunity on this side of activity as well. I am very convinced about the prospects for L&T going forward. But one should be mindful of the fact that they have a limited ability to deliver in a given period of time because of the weak ecosystem constraint that they may face. Otherwise, there is no doubt about the prospects for infrastructure and capital goods players like L&T to progress and prosper further in coming years.
Given the US generic pricing pressure and the clear tilt towards APIs, how are you viewing the pharma space right now? Are you adding on dips?
The fact remains that Indian pharma companies will continue to face US FDA related pressure on the generic business because definitely it is very obvious and clear that most of the global pharma companies do not want Indian generic companies to progress beyond a level. World definitely demands medicines at a cheaper cost, the US included. Indian pharma companies have the ability for that. Also, apart from generics, they have got the specialities in their portfolio. That is again a cause for a threat to the global players.
Having said that, the larger part of the play and the growth is likely to come from the API segment for most of the companies, given the fact that we have the China plus one strategy adopted by the global markets. India definitely stands extremely convinced as far as the ability to supply to the world major is concerned.
API is one domain which has probably some of the largest and marquee customers of the world who are the largest players of the pharma space in the world and at the same time the chemistry remains extremely strong as far as India companies are concerned who are in a position to relatively deal with this kind of subject much better.
So companies with strong API portfolios like Divi’s, Laurus and even some of the domestic pharma companies are included. The current correction in the prices in some of the pharma companies remain an opportunity to buy into the portfolio.
