Dalal Street Voice: Capex target of Rs 7.5 lac cr signals Govt intent to pursue investment led growth: Ajay Menon

Ajay Menon, Whole-time Director & CEO- Broking and Distribution at Motilal Oswal Financial Services Ltd. (MOFSL) said that Capex target of Rs. 7.5 Lac crore vs Rs. 5.5 Lac crore is most important takeaway from this budget and signals the intent of the Govt to pursue investment-led growth for the economy.

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Ajay who is a member of the Institute of Chartered Accountants of India has over 22 years of vast experience in Indian Capital Markets. He has been the cornerstone of MOFSL’s strong track record and a driving force behind the operational excellence of the group.

In an interview with Zeebiz's Kshitij Anand, Menon said that if the capital market conditions remain favorable, actual achievement could be higher than Rs 65,000 cr. Edited excerpts:

Q) What is your view on the divestment target set by the government?

A) In the past, Govt was setting a higher target for divestment but ended up achieving only 20-30% of that, so it appears that this time, a more realistic target has been set for divestment.

If the capital market conditions remain favorable, actual achievement could be higher than Rs 65,000 cr.  

Q) There was a lot of noise around virtual assets? What are your views?

A) Govt is finding it difficult to regulate cryptocurrencies, given the global acceptance & popularity of these currencies, so they have chosen to put a tax on it.

We do expect a bill soon to avoid confusion regarding the legality and regulatory framework around it.

Q) What is your take on govt CAPEX plans in Budget 2022 which remains to be the top highlight?

A) Capex target of Rs. 7.5 Lac crore vs Rs. 5.5 Lac crore is the most important takeaway from this budget and signals the intent of the Govt to pursue investment-led growth for the economy.

Though it is difficult to make a case for a broad-based Capex revival in the private sector, there are sectors where greenfield expansion is taking place (e.g. cement, chemicals, metals, oil & gas, etc)

Q) How do you see plans announced by the govt under PM Gati Shakti?

A) Several announcements including the PM Gati Shakti program show a focus on improving logistics and highway infrastructure.

That’s expected to boost India’s plan to become a smartphone and electronics manufacturing base for the world, an alternative to China.

Q) Do you think that Gift city is a game-changer?

A) Gift city as a concept holds a lot of promise, but we should wait for the response from market participants and growth in transactions value before terming it as a game-changer.

Q) How do you see strategic sales in government-owned banks? What is the kind of impact you see on public sector banks?

A) Though in the last budget there was an intent to carry out strategic sales of PSB’s, it appears there is a long-drawn process and legal hurdles for completing the transaction.

It’s a setback to the re-rating of the entire PSU Bank universe, as the Govt keeps funding these banks, and unlocking of the value of smaller PSU Banks is contingent upon the strategic sales.

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)