Divam Sharma does not have significant investments in the PSUs, despite its notable outperformance in the lacklustre market.
“Aquaculture, infrastructure, and green energy sectors are on the radar after the interim budget,” says Divam Sharma, founder and fund manager at Green Portfolio PMS, in an interview to Moneycontrol.
He says the focus on aquaculture will lead to a blue revolution for India and investment by the government in infrastructure and green power is only essential for India as a large developing economy.
Considering India’s target of becoming carbon neutral by 2070, there could be impressive performance in power and electric vehicle segments, says Divam with over 13 years of experience in investment management in stock markets. Excerpts from the interaction:
Which are the sectors on your radar after the interim budget?
Aquaculture, infrastructure, and green energy. We invest in these sectors and we were expecting them to get some attention this year. Focus on aquaculture will lead to a blue revolution for India and investment by the government in infrastructure and green power is essential for the country as a large developing economy.
The finance minister expects a fiscal deficit of 5.1 percent for FY25. Do you think this is achievable, given the global risk factors?
A 5.1 percent fiscal gap is surely a big, ambitious target, but as the FM said, India has been able to grow this year, despite the global inflation and high interest rates, with ample focus, we may get close to the 5.1-percent target. As said, India is working to establish better relations with other global economies. Many agreements were sealed during the G20 summit last year and these would lead to India having better bilateral trade relations that can help improve our fiscal deficit.
How do you rate the budget on a scale of one to 10?
It’s a one, if we look from the perspective of fresh announcements and developments since nothing significant has been announced, but it’s a 10 if we see for what it was, a vote-on-account for the current government to work for the next four months. The finance minister did a great job boasting of the ruling party’s achievements to secure a win in the upcoming elections, and that’s exactly what was expected today.
Do you think the expectations have been increased for the full-year budget to be tabled in July?
Definitely. It is almost certain that the ruling party will be re-elected. The interim budget, by barely speaking of focus sectors and new developments, has only increased the hopes of various industries as they hope for some allocations in July.
The finance minister spoke greatly about the government’s past achievements and future plans, so the expectations are higher since the current government is expected to also be the winning party.
Capex for FY25 seen at Rs 11.1 lakh crore against Rs 10 lakh crore in FY24, but FY24 capex has been revised to Rs 9.50 lakh crore. What is your take?
This year’s allocation to infra is almost double the capex of FY22, so the capex has almost doubled in just two years. Given the requirements of a developing country like India, expenditure on infrastructure is essential for our economic growth. The railways were in focus during the speech but we are hoping to see more and definite commitments by the government towards improving infrastructure later in July.
Do you expect big returns from the power and electrical vehicle (EV) segment in the coming years?
In the budget, the FM put a lot of emphasis on green energy – from rooftop solarisation to MUFT energy to increasing focus on wind energy. We, as a fund house, are invested in many companies that are in proxy play with the electrical vehicle segment and these companies have given stellar performance on the back of good order books and push by the government through PLI schemes.
India lags in EV penetration which is just 1-1.5 percent as compared to other countries like China and the US. Tesla has also been in talks about setting up a manufacturing plant in India, which portrays India as an up-and-coming top manufacturing destination. Considering India’s target of becoming carbon neutral by 2070, we can see good performance in these sectors.
What do you expect from the next-generation reforms that the government is focussing on?
The finance minister talked about public digital infrastructure, deep tech, and health infrastructure during her speech. The government is focussing on next-gen reforms with the encouragement of deep tech in defence with a new scheme and easily affordable credit for the tech industry. Women’s health also got some attention with the announcement to promote cervical cancer vaccines and maternal and child healthcare.
The government has lowered its divestment target for FY24 to Rs 30,000 crore from Rs 50,000 crore and kept its Rs 50,000 crore for FY25. Do you think the targets will be achieved, given the rally in PSU stocks?
We do not invest in PSUs, and therefore, we won’t be able to assess the achievability of the lowered divestment target of Rs 30,000 crore for FY24 or speculate on the possibility of exceeding the Rs 50,000 crore target for FY25, considering the rally in PSU stocks.
Are you betting big on the PSU Bank index that is the big outperformer in the dull market? What are the major reasons?
We do not have significant investments in the PSUs, despite its notable outperformance in the lacklustre market.
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Reference Link:- https://www.moneycontrol.com/news/business/budget/mc-interview-green-portfolios-divam-sharma-lists-3-sectors-to-bet-on-after-budget-2024-12175611.html