Pramod Kumar, MD & Co –Head of Banking India, Barclays
Apr 06, 2018 | Source: ET
Investment activity was spread across evenly in mot segments. Lot of companies tapped IPO markets this year led by few large life insurance companies.
Other than banks and NBFCs which have raised growth capital, the rest of the activity has centred on OFS and not necessarily growth capital.
Recovery in private investments is visible with improvement in corporate earnings over last couple of quarters.
Policy measures such as GST, IBC and RERA will start yielding results gradually.
Growth capex in renewable and road sectors is visible.
Slight hardening of interest rates has very little impact on capex activity.
Capex decisions will be mostly driven by pick-up in demand and capacity utilisation levels.
It is still some time away from a strong capex cycle returning with perhaps the exception of activity in select sectors such as roads, renewables, cement, etc.
US rate increases may lead to gradual flight of capital but may not be disruptive, unless Fed springs any surprises.
Global investors are more comfortable with top-rated companies such as HDFC, HDFC Bank or strong government owned entities like NTPC that are able to access Masala Bond markets at rates similar to what they might get in local INR markets, enabling them to diversify their pool of capital.
Outbound deal momentum is very low with little risk appetite. It is only restricted to large corporates.
Activity through NCLT processes where domestic players are likely to bid for companies is likely to be seen.
Taxation or license cancellations are big overhangs that have affected inbound deals. A lot of global players are still viewing India as a ‘not so easy’ market to operate.
However, those companies operating here for long have become quite comfortable to invest more or the ones that are operating in businesses that are consumption driven or where technology is playing a big role such as Uber or Amazon are very bullish on the opportunity Besides financial sponsors, pension funds and investors like SoftBank, Alibaba will continue to invest in India due to the recent positive policy changes and governance.
Ease of doing business in India is improving but still some way to go.
Foreign portfolio investors may be worried over the outcome of general elections in 2019, which Will decide the country’s fate for the next five years which may lead to volatility in the market.
Healthcare services happen to be an attractive sector, with strong demand drivers and an underpenetrated market. Strong financial sponsor activity is visible in this sector.