ROE levels will go up further in power; can’t make great returns in IT: Viral Berawala

economictimes.indiatimes.com:

Viral Berawala, Director, Buoyant Capital, says, “IT again has become a 7-8% growth sector plus add 3 or 4% for dividend. So IT reverts back to being a 11-12% growth sector and valuations for most companies are at least one standard deviation above average. In IT, we are unlikely to make disproportionate returns from this point on. It maybe an okay place to hide but not for making great returns.”

Do you like the power space and which part of the value chain in power would you be most bullish on?
In power, the August volume growth has been tremendous.

I have never seen YoY growth like that in power. Some of the power generating or transmission companies are why we would look at. So, we are just invested in a transmission company.

We think that is a very safe place, plus what happens is there is no risk of default, etc, and lastly, because the company also has listed InvIT, a lot of these transmission companies could actually scale up faster and after doing the capex and making the project would transfer the assets into the transmission company. So, over a period from very good ROE levels, we can still see the ROE levels go up further.

What about some of the renewable and solar and wind kind of names, which has caught the fancy of the market quite a lot? Have you looked at them?
Sure, we have looked at them and passed them. What is happening is that, especially on the wind side, coming from very bad days, numbers have started to look good.

And there have been order wins, but nobody has really been able to succeed in the three megawatt and above turbine size. And in the lower size, there continues to be a lot of competition. So from a low base, those numbers will likely look good but we are not very bullish on that over the