Monday, July 25, 2011

Value buys present across market spectrum: PVK Mohan, Principal PNB Asset Management

PVK Mohan, equities head, Principal PNB Asset Management, which manages about Rs 5,500 crore, has increased exposure to agro-based firms, pharmaceuticals, consumer-centric stocks and auto ancillaries as these sectors are better insulated from high interest rates and its impact on demand and profit margin.

Infrastructure and select real estate stocks are Mohan's contrarian bets, while he prefers to stay away from cement and banking shares. "There are value-buys across market spectrum. Themes like agriculture and related rural economy-linked industries can be a part of long-term play. There are buying opportunities in mid-cap pharma, consumer-related and auto ancillary space," he told ET.

Mohan manages Principal Growth Fund, Dividend Yield Fund, Tax Savings Fund, Balanced Fund and Conservative Growth Fund. He prefers well-managed and low-debt companies with stable operating margins at all market cycles. Also, he likes firms with low capital needs, operating in non-competitive spheres, with easy cash flows and which are at lower valuations due to negative Sectoral or market overhang. "Infrastructure, capital goods and auto ancillaries are rate-sensitive sectors, but there are contrarian opportunities present in these counters," he said.

"We've increased exposure to consumer, pharma and healthcare, but then we're cautious adding stocks at these levels. You don't get too much on the table with respect to valuation," he added. "We've some exposure to real estate companies...These are companies with manageable debt levels and have their project outside stressed markets like Mumbai and Delhi. We've not invested in commercial real estate," said Mohan. He has increased investments in companies such as ITC, TCS, L&T, Lupine, Torrent Pharma, Areva T&D and Chambal Fertilisers. He has reduced exposure to ICICI Bank, RIL, REC,OBC and HDFC. "At about 16 time's forward price-to-earnings, Indian markets are commanding a wee bit higher valuation," he said.

"We're slightly higher than our median long-term average. If the market corrects 5-7%, it will be a good entry point for long-term investors," he said.

He expects companies to register 12-13% growth in the first quarter vis-a-vis 15-18% estimated by the broker community. Investors can start taking long-term bets on equities, he said.

Source: http://economictimes.indiatimes.com/markets/analysis/value-buys-present-across-market-spectrum-pvk-mohan-principal-pnb-asset-management/articleshow/9353440.cms



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