Budget will continue to focus on capex and manufacturing: Ravi Dharamshi

I think Budget will continue to focus on these areas and that remains the best area to focus on from next three to five years because the capex cycle and the manufacturing cycle is just picking up. So I think that will remain but the burden needs to shift from central government to state government and private sector on continuing with the capex cycle. But I think that those themes will still continue and budget will give enough incentives for the cycles to continue is what I feel.

Would you agree with my assessment?
I absolutely agree with that. I think we have been going through a time correction, consolidation. We had fantastic gains post COVID and we needed to digest those. I think that digestion period is coming towards an end. Whether Budget provides that trigger for that next wave I am not sure but sooner or later even if there is no negative and if the Fed pivots I think we should be ready for the next move.

Infrastructure you think that is the place to bet it on purely because there is so much pessimism and it has lasted now for decades? Is infrastructure the theme?
Infrastructure, not from investment point of view, but I think India’s infrastructure is definitely improving. You cannot but be optimist about it. In a year’s time, if you take the example of Mumbai itself, we will have the coastal road ready, we will have the trans harbour link ready, we will have metro, underground metro ready. So lot of things will come to fruition in next 12 to 18 months. So I am very optimistic about it. Of course, we have a lot of large projects going on throughout the country as well. So I think this connectivity is important for us to maintain the pace of growth. I do not think there is any question that infrastructure will improve but it is only that we are way more impatient and we demand much more speed than what finally gets delivered.

My resistance to investing in infrastructure is only from the point of view that there are not many good business models available in that space. Of course, the physical growth is there in infrastructure.
This is how we think the stack looks like. If there is infrastructure boom, L&T would benefit. If there is a push towards alternate energy, , Adani, to a large extent . If tax rates are changed, the immediate push would come into or a because the money in hand of a taxpayer it goes higher. Would you agree with this assessment that this by and large should be the Budget collection, a bit of combination of rural, autos and consumption?
I think these are the themes actually which are quite already underway. It is already Larsen’s order book which is almost two and a half, three years. The book to bill ratio is quite healthy and the execution cycle is also going on very smoothly. So I would not say that this is going to be a fresh impetus. We are already into the cycle and markets have recognised it to a large extent, maybe not Larsen, but some of the other capex stocks are trading at quite a bit of premium. So defence, capex, manufacturing these are the themes.

Finally, what are the two areas that is really-really pinching India? One is that we are importing more than we are exporting and second is we have to provide employment to many-many people. So government has to give push to those sectors which will create employment opportunities and create export opportunities. There are many things that can happen outside of the Budget which can benefit as well, like signing of the FTAs. I think those are the things that we are really waiting for.