Revival in Indian manufacturing sector —history indicates cycle lasts 5-7 years
Pankaj Tibrewal's insights shed light on the prospects and challenges in various sectors of the Indian economy. His observations suggest a revival in the manufacturing sector, corrections in IT company valuations, near-term softness in the chemicals sector, an opportunity to increase exposure to chemical companies, and gross margin expansion in the cement industry. Investors can leverage these insights to make informed decisions based on their risk appetite and investment objectives. It is important to conduct further research and analysis before making any investment decisions in line with one's financial goals.
India's manufacturing industry is currently experiencing a revival. This positive outlook bodes well for the overall economic growth of the country.
In a recent interview with CNBC-TV18, Pankaj Tibrewal, Senior Executive Vice President and Fund Manager-Equity at Kotak Mahindra AMC, shared his views on various sectors in the Indian economy. While sharing his insights into the manufacturing, IT, chemicals, and cement sectors, Tibrewal highlighted a promising trend in the manufacturing sector, stating that historical data indicates a cyclical pattern that typically lasts for 5-7 years.
“We are positive on the entire revival of manufacturing and this time it looks real. When we analyse the previous cycles, we believe that the cycle lasts for anywhere between 5 and 8 years,” he said.
Discussing the IT sector, Tibrewal noted that several large-cap IT companies have witnessed a substantial correction in their valuations. This correction presents an opportunity for investors looking to enter or increase their exposure to the sector. The adjustment in valuations could be attributed to market factors or industry-specific developments.
“If you take a two-three year view, next two quarters could provide opportunity to start increasing your IT exposure and we are looking at such opportunities. Especially on the largecap IT names, we have seen that valuations have meaningfully derated,” he said.
Regarding the chemicals sector, Tibrewal expressed his belief that softness will persist in the near term. He pointed out that end prices in the chemicals industry have softened, affecting the overall profitability of companies. This softness may be attributed to factors such as demand-supply dynamics, input costs, or global market conditions.
Despite the short-term challenges, Tibrewal emphasized that the dip in chemical companies' share prices offers an opportunity for investors to increase their exposure to the sector. Astute investors who recognize the long-term growth potential of the chemicals industry might find this downturn as a favorable entry point.
Moving on to the cement sector, Tibrewal mentioned that gross margin expansion has played out to a larger extent. This expansion indicates improved profitability for cement companies. Factors such as increased infrastructure spending and robust demand for housing have contributed to the sector's growth. Cement companies with efficient operations and strong market presence are likely to benefit from this trend.
For more details, watch the accompanying video
(Edited by : C H Unnikrishnan)
First Published: Jun 15, 2023 1:24 PM IST
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