'Asian equity markets are more attractive now'

Q&A: Sunil Godhwani

Religare Enterprises, the leading financial services group promoted by Ranbaxy’s Singh family, has plans to expand into the retail investor segment. Sunil Godhwani, the company’s CEO and Managing Director, spoke to Joe C Mathew on the present turmoil in capital markets and how it affects them and the country’s equity investors. Excerpts:

How do you see the current volatility in Indian capital markets?

This is an outcome of the global developments that took place over the last year. As far as India is concerned, there is a strong reason to invest. Now, Asian equity markets are more attractive than ever before. People understand that for long-term funds, there are great opportunities today. From that perspective, I think we are well-placed. It is difficult to consider short-term repercussions and say what could happen in such a scenario. People who have exposure to global funds, such as Lehman or Merrill, need to be revealed or revoked and re-adjusted in valuations.

How does it impact Religare’s growth plans?

At Religare, we have always had three clients — retail, wealth management and institutional. Retail carries on as it is strong. About our institutional business, I can say that we were never dependent on foreign institutional investors (FIIs). So, we never got empanelled with bigger FIIs as their business were erratic from our perspective. Also, sometimes, we were not up to deliver services for them. That’s the silver lining for us today. However, that does not mean we should not be empanelled in the next one. Market volatility is just there. What do you read into it? It is beyond logic.

But you have an international presence...

The international presence we have is basically franchises for distribution and deals. There is no shortage of that. There is a good pipeline and there is good demand. We are already working with a lot of companies to get them listed on AIMS. We are evaluating those options, talking to many private equity funds because at this point of time, PE funds are interested in finding opportunities. In these challenging downturn conditions, there are opportunities. What is negative is the sentiment. For the whole financial sector, the sentiment is negative, which is understood while considering that a big institution like Lehman Brothers, which probably made some wrong decisions, has been victimised. It is a victim of the market.

Will things improve in the coming months?

I cannot give a timeline. Whether the market will turn bullish in six months or in two years, I don’t know. Religare is not involved in timing the markets. Being an integrated financial services house, we will provide services, irrespective of whether the market is up or down. We have a diversified portfolio of services on offer. I think the intelligent buyers will see an opportunity in these markets to get in and stay long. Surely, nobody is going to be short in this market.

What could be the reaction of retail investors? Do you need to convince them?

Equity investments do not need any convincing in India. Equity penetration in the country is just 3 per cent. Public investment in equity in India is at rock bottom. It can’t go below that. It can only get better. People should think, ‘The Sensex was at 13,000, I didn’t buy. It went up to 21,000, I lost an opportunity.’ Now as the Sensex is back below 13,000, people should say ‘I have got Rs 100, let me put 10 per cent in equity’. There is opportunity now as in six months or maybe two years, they are going to see the markets rise and make more money than a bank deposit.

Are plans to list Religare Super Labs (formerly SRL Ranbaxy) on schedule?

Within the next year, we would like to take Religare Super Labs public. The valuation will be realistic. I cannot give you the numbers as we are waiting for the September quarter results.