India’s record spending on roads, power plants and ports will provide a “tailwind” for equipment makers, leading the benchmark stock index to a 10 percent gain this year, Principal Pnb Asset Management Co. said.
Principal Large Cap Fund, the best performing among 64 Indian growth and income funds this year, has been adding shares of power and construction equipment makers relative to their weighting in the Bombay Stock Exchange BSE100 Index, Chief Investment Officer Rajat Jain said in an interview.
India, ranked below war-ravaged Ivory Coast and Sri Lanka for the quality of infrastructure, plans to double spending to $1 trillion in the five years to March 2017. That may lift earnings at companies including units of ABB Ltd., the world’s biggest maker of power-transmission equipment, and Siemens AG.
“The tailwind is so strong,” for equipment makers, Jain, who manages $1.85 billion in assets, said in Mumbai yesterday. “Execution is generally improving and we are positively surprised with the order flows.”
Net income at Bharat Heavy Electricals Ltd., India’s biggest power-equipment maker, rose 40 percent in the quarter ended March 31, the fastest pace in more than two years.
Bharat Heavy accounts for 2.6 percent of the Principal Large Cap Fund while Larsen & Toubro Ltd., India’s largest engineering company, made up 3.2 percent of the fund, as of Feb. 28, according to Bloomberg data.
‘Shifts Gears’
“The power sector is poised to remain in a high growth trajectory in the coming years as the government shifts gears on infrastructure,” Bharat Heavy’s Chairman B. Prasada Rao told reporters yesterday. The state-run company expects sales to increase to 500 billion rupees ($11 billion) by 2012, he said.
Spending delays may affect the goal. Projected investment in docks, cranes and wharves may reach 407 billion rupees in the five years ending March 2012, half the original goal, the Planning Commission said on March 23. Funding for road and bridges was lowered to 2.79 trillion rupees because of fewer available assignments.
India is ranked 89 out of 133 nations for its infrastructure, according to the World Economic Forum’s Global Competitiveness Index
Bharat Heavy rose 1.1 percent to 2,415.8 rupees in Mumbai yesterday, helping the BSE Capital Goods Index to a 1.4 percent gain. Jain expects earnings of Bharat Heavy and the 29 members of the benchmark Sensitive Index to rise 21 percent in the year that started yesterday. The Sensex, which has risen 1.3 percent this year, gained 0.9 percent on April 1. The measure rose 81 percent last year, the best annual performance in 18 years.
Indian utilities plan to add 78,700 megawatts of generation capacity in the five years ending March 2012 and 100,000 megawatts in the following five, according to the Power Ministry.
History Expert
Jain’s Principal Large Cap Fund also owns companies including Oracle Financial Services Software Ltd., a unit of Oracle Corp., which has almost tripled in the past 12 months, and Reliance Industries Ltd., India’s most valuable company. The fund also owns ABB Ltd. and Siemens India Ltd.
Jain, who likes to read books on Indian history and World War II, says his hobby helps him in picking stocks.
A fund manager must know the “DNA of the company” and history is about “understanding people and how they have evolved,” he said. Jain often speaks to middle-level managers of companies before investing.
Source: http://www.businessweek.com/news/2010-04-01/budget-tailwind-to-lift-india-power-road-builders-jain-says.html
Principal Large Cap Fund, the best performing among 64 Indian growth and income funds this year, has been adding shares of power and construction equipment makers relative to their weighting in the Bombay Stock Exchange BSE100 Index, Chief Investment Officer Rajat Jain said in an interview.
India, ranked below war-ravaged Ivory Coast and Sri Lanka for the quality of infrastructure, plans to double spending to $1 trillion in the five years to March 2017. That may lift earnings at companies including units of ABB Ltd., the world’s biggest maker of power-transmission equipment, and Siemens AG.
“The tailwind is so strong,” for equipment makers, Jain, who manages $1.85 billion in assets, said in Mumbai yesterday. “Execution is generally improving and we are positively surprised with the order flows.”
Net income at Bharat Heavy Electricals Ltd., India’s biggest power-equipment maker, rose 40 percent in the quarter ended March 31, the fastest pace in more than two years.
Bharat Heavy accounts for 2.6 percent of the Principal Large Cap Fund while Larsen & Toubro Ltd., India’s largest engineering company, made up 3.2 percent of the fund, as of Feb. 28, according to Bloomberg data.
‘Shifts Gears’
“The power sector is poised to remain in a high growth trajectory in the coming years as the government shifts gears on infrastructure,” Bharat Heavy’s Chairman B. Prasada Rao told reporters yesterday. The state-run company expects sales to increase to 500 billion rupees ($11 billion) by 2012, he said.
Spending delays may affect the goal. Projected investment in docks, cranes and wharves may reach 407 billion rupees in the five years ending March 2012, half the original goal, the Planning Commission said on March 23. Funding for road and bridges was lowered to 2.79 trillion rupees because of fewer available assignments.
India is ranked 89 out of 133 nations for its infrastructure, according to the World Economic Forum’s Global Competitiveness Index
Bharat Heavy rose 1.1 percent to 2,415.8 rupees in Mumbai yesterday, helping the BSE Capital Goods Index to a 1.4 percent gain. Jain expects earnings of Bharat Heavy and the 29 members of the benchmark Sensitive Index to rise 21 percent in the year that started yesterday. The Sensex, which has risen 1.3 percent this year, gained 0.9 percent on April 1. The measure rose 81 percent last year, the best annual performance in 18 years.
Indian utilities plan to add 78,700 megawatts of generation capacity in the five years ending March 2012 and 100,000 megawatts in the following five, according to the Power Ministry.
History Expert
Jain’s Principal Large Cap Fund also owns companies including Oracle Financial Services Software Ltd., a unit of Oracle Corp., which has almost tripled in the past 12 months, and Reliance Industries Ltd., India’s most valuable company. The fund also owns ABB Ltd. and Siemens India Ltd.
Jain, who likes to read books on Indian history and World War II, says his hobby helps him in picking stocks.
A fund manager must know the “DNA of the company” and history is about “understanding people and how they have evolved,” he said. Jain often speaks to middle-level managers of companies before investing.
Source: http://www.businessweek.com/news/2010-04-01/budget-tailwind-to-lift-india-power-road-builders-jain-says.html
Posts
No comments:
Post a Comment