The ENAM Auto Conference is underway in Singapore with nine companies participating in the event. Manish Chokhani of Enam Securities says that the conference is being used as a platform to showcase potential of the Indian auto companies.
"Companies like Bharat Forge and Motherson Sumi have market caps ahead of Delphi and Vistion in the US," he says.
Chokhani says that the conference is meant to show how these companies are globalising themselves. Now people, he says, are realising that there are good opportunities in the auto sector as well.
Excerpts from CNBC-TV18's exclusive interview with Manish Chokhani:
What companies are you showcasing and what kind of response are you seeing in Singapore?
We have put together companies to give people a sense of not just the local markets, but also on how these companies are globalising. Increasingly, they have been buying out companies in Europe and other parts of the world.
Apart from the local demand, which people keep focussing on, the reality today is that companies like Bharat Forge and Motherson Sumi have market caps ahead of Delphi and Vistion in the US.
The way the market used to signal for IT companies five-six years ago, people probably are getting the sense that there are good opportunities for the auto sector as well, going ahead. So it is really from that context that we have tried to put people together.
You have also got TVS Motor in that line-up? What sort of appetite has it seen and how do you like the company?
I will not say anything specifically on any company. But TVS Motor is illustrative of the Indian two-wheelers, which managed to get scale in India first, then they faced great competition from the Japanese majors. And now, whether it is TVS or Bajaj Auto, they have now started to unfold their flag and are going outside India; whether it is Indonesia or even Latin America and have begun addressing markets over there.
What is interesting is that we had people coming in from Japan and Korea who attended this conference to figure out what these players will do in other parts of the world, which is why it is much more interesting.
Is it more focussed towards auto ancillary plays or mainline auto players in two wheelers and four wheelers as well?
It is a mix of all types of companies. In fact not just two wheeler, four-wheeler and auto ancillary, we have put together a couple of auto finance companies as well. For example, Shriram Transport Finance Corporation has also come and presented here, which finances in the used trucks market. The banking sector so far has not addressed this area and there is great money to be made there as well.
What is it that investors like best about this story; the pure volume growth that this entire space can offer?
One takeaway is to just see the different dimensions to the story here. Some people just saw auto ancillaries as a cost arbitrage or as an export play. For example, Motherson Sumi presented here, it has become a Tier I supplier to a lot of companies out of Europe.
Similarly, we have the local demographic story and the underlying supply story. So there are different ways to slice this cake. If one looks at it on a bottom up basis and when one sees all these people together in one group, one knows that this is already 5-6 per cent of Indian GDP.
What is the investor mood there generally? Is it still tinged with scepticism about valuations or hungry for putting in some more money to work in this market?
Everyone is three-year bullish and three months cautious. Having said that, everyone is invested and everyone has to be bullish about India, there is no two ways about it. This country is emerging and it is at the center stage.
There have been 90 one-on-one meetings with companies and investors and people from across the world from Japan, Korea and Hong Kong. There is an enormous appetite. I do not think that is going away in a hurry.
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