My next question is perhaps based on what you also flagged off right now, which is that new sectors are taking over. Old sectors or traditional sectors are taking a backseat. But the analyst in Bombay also focuses on two big sectors, which is steel and cement. Now, if the new sectors are taking over, old sectors from a private sector capex standpoint, they could take a backseat. So, do you think indirectly, it could have impact on steel and cement demand also, which should grow ideally when the economy is booming, but which may not grow because of new capex?
Vinayak Chatterjee: Now, unfortunately, I have to agree with you again.
My lucky day, it is on record, 10th of September.
Vinayak Chatterjee: So, the point is that if you see the cement industry growth, which is probably the bellwether of determining infrastructure spend or traditional industry spend on building factories, etc, what is the cement sector growth in real terms?
I mean, it is 7%, 8%, 9%. With the same pace as the growth of GDP, in fact, nominal GDP is growing at 12%. But the cement sector is even less than nominal GDP growth. Am I right? So, therefore, it substantiates the hypothesis that we are seeing a structural change in the Indian economy, structural change in investment patterns, where new sectors are emerging, old sectors are growing at a far lesser space in terms of capex. But the new sectors are not large enough to dominate the overall capex story. That is really the summary of our discussions today.
Which stocks that our investors in Mumbai should look at perhaps, which stand to benefit the most and I ask you that because the way you are pointing out, it seems like it is the newer sectors and newer segments which are really leading the growth here.
Vinayak Chatterjee: So, three suggestions. Anything to do with traditional and non-traditional power. Companies that are in coal thermal are going to see boom times because there is going to be a demand-supply imbalance in favour of producers. So, anything to do with the power sector and renewables, green, of course, is in boom times on investment. So, anything to do with the power sector, switchgear, transformers, cables, solar modules. So, power sector stocks are going to see fair tailwinds. Defence, an under-investigated sector. Please ask your own analysts and other analysts in Bombay and your investors to take a hard look at the order books of companies like Mahindra, like Bharat Forge and many others who are heavily invested and benefiting from the government’s major push on indigenisation of defence production, both import substitution and export.
And finally, healthcare. The acute shortage of good public health care that is very clearly leading to a shift of popular movement from public health care facilities to private and that is playing out across India. So, the companies which are listed, take a hard look and I would recommend healthcare stocks across the board.
Given the fact that there has been talk, maybe it is a little bit broad with respect to green energy, etc. How do you see that really shaping up, given that we have seen quite a few companies as well talk about this?
Vinayak Chatterjee: Look, green energy, the story about large capacities being created in green energy is well known.
Various companies are implementing massive projects across the country on green. So far as green is concerned, the discourse has actually changed to 24 by 7 green power, which means the conversations are now about storage.
And in storage, you broadly have two sectors, pump storage projects, which are proliferating, and battery storage and the biggest announcement there has been Reliance’s announcement that they have won the PLI scheme of the government to set up 10 gigawatt hours, huge capacity in batteries.
So, the story in renewables is well known about new capacity, but the story is shifting to storage and that is where the attention should go now.
Because we talked about green energy and there is this increased clamour in the stock markets right now that the next set of NPAs or next set of bubble perhaps could come in from some of these solar module and wafer manufacturers, because they have put up large capacities, expecting the boom to happen and a lot of export orders to come by. But at some point of time, there could be a situation of supply glut and an oversupply kind of situation. What is your take on that?
Vinayak Chatterjee: It is too early to cry wolf. I think there is a massive demand of solar modules in India and surrounding countries and export orders from the US because of their disinterest or disenchantment with China, Indian solar manufacturers are often getting a better price for exports to the US than they are even getting in the domestic market. So, it is not the right time to cry wolf on the negative predicament of solar manufacturers in India.
