London: A top performing fund manager at fund company F&C Asset Management Plc. still sees rich pickings from large Indian companies exposed to robust local growth, despite sharp gains in domestic shares this year.
“We like the long-term India story,” said Sam Mahtani, who manages $156 million (Rs620.4 crore) as fund manager of F&C Indian Investment Co. “We are very bullish on the infrastructure outlook.”
Data provided in its fact sheet shows that the fund has given a return of 93% in the past one year, compared with about 79% return provided by its benchmark.
“We are still very happy with the outlook for a lot of these infrastructure stories,” he said. “It just gets better and better,” added Mahtani, who also manages other emerging market equity funds.
India’s gross domestic product (GDP) grew an annual 9.3% in April-June.
The country, the world’s fastest growing major economy after China, expanded 9.4% in the last fiscal year to March—its strongest pace in 18 years.
Overseas investors are pouring money into Indian stocks, pumping in about a net $16 billion (Rs63,680 crore) so far this year, boosting the local currency to a near-decade high this month.
F&C fancies infrastructure stocks, with India estimated to need $475 billion over the next five years to shore up its creaking infrastructure and sustain the economy’s growth rates.
State-run energy equipment maker Bharat Heavy Electricals Ltd (Bhel) is also a key stock holding. “Bhel is probably our most highest conviction idea and it is definitely a five-year story,” Mahtani said in an interview. “They are succeeding in terms of their order booking and clearly the theme is very significant in terms of power shortages and they are the main beneficiary of that theme.”
Engineering and construction firm Larsen and Toubro Ltd is another main holding of F&C. India’s top oil and petrochemicals company Reliance Industries Ltd accounts for about 17% of F&C’s holdings and is its top pick. Shares in India’s biggest listed firm have soared 119% so far this year.
“Strategically, we think it is one of the best plays on the economy,” said Mahtani. “They are still continuing to beat forecasts and they are still moving up the value chain and getting better margins from their businesses. What excites us most about Reliance is the new businesses, the potential upside from the oil and gas discovery business, which the market underestimates.”
Top mortgage firm Housing Development Finance Corp. Ltd and Bank of India are also among the top picks and F&C has been increasing its exposure to the sector.