Avoid Infrastructure stocks until the problems are solved: P Phani Sekhar

In a chat with ET Now, P Phani Sekhar, Fund Manager-PMS, Angel Broking shares his views on the infrastructure sector. Edited Excerpts:

ET Now: You have always been circumspect on Infra. Would you touch them now? Would you believe there is a sea change there or you just avoid them?

P Phani Sekhar: There is a change. I do not agree that it is a game changer. FDI in construction is positive for some of the companies, who are in a deep balance sheet mess. The basic issue of land acquisition has not been sorted out. This means that the order book will not simply increase. For many of these companies a large part of their problem is that they do not have order books to execute on. Even if they were to be given order books to execute, they are simply not in a position to mobilise working capital because their balance sheets are in a deep mess.

Those issues will not go away in a quarter or two. It will take its own time. We had all been talking about the macro environment regarding infra improving for the last three to four months but nothing much has happened on the ground. From December, we can start seeing something. Even if you say that in budget 2015-2016 there will be a lot of allocations, things will start improving. It will take at least another four quarters to see change in the fundamentals. There will be a lot of time for you to get into these stocks at your chosen prices. It will be a good idea not to chase these stocks.