Date:03/05/2006 URL: http://www.thehindubusinessline.com/2006/05/03/stories/2006050303401700.htm

Back Indian stocks `not cheap': DWS

Our Bureau

Launches Deutsche Asset Management's retail brand

MR ED PETER (left), Head of Asia-Pacific and West Asia, Deutsche Asset Management, Mr T. Gerhardt, Managing Director & Head of Global Emerging Markets Equities for DWS, and Mr G. Chadha, Managing Director and Chief Country Officer, Deutsche Bank, at a press conference during the launch of Retail Brand, DWS Investment in India. - Shashi Ashiwal

Mumbai , May 2

DWS Investment GmbH that manages about 2-billion worth investments in Indian stocks, on Tuesday said domestic stocks were `not cheap' but it still expects the bourses to give 15-20 per cent returns over a five-year period.

DWS, the asset management arm of Deutsche Bank, is bullish on sectors such as power, construction, cement and power-equipment manufacturing and other infrastructure-related sectors in India, Mr Thomas Gerhardt, Managing Director, Head of Asia/Pacific and Head of Global Emerging Markets, DWS Investments, told presspersons.

Pharmaceuticals sector is another area that looks attractive with India having the potential to emerge as the world hub for generic drugs, he said.

Mr Gerhardt was here in connection with the launch of Deutsche Asset Management's (DeAM) retail brand DWS in India.

He said DWS Investments continues to be `overweight' on both India and Brazil, but the Latin American country has more potential, considering the lower interest rates there. In terms of forward earnings multiple of nine times, Brazil looks more attractive compared to India, where the stocks are trading at a multiple of 15-20 times, he said.

Stock market investments

DWS that manages 13 billion for emerging markets, invests in Indian stock market through three routes viz., DWS India (600 million ), DWS Invest BRIC Plus (about 560 billion ) and other emerging markets and international funds (800 million ). Some of the Indian stocks where DWS invested are NTPC, BHEL, Larsen & Toubro, Satyam and Infosys.

On valuations, Mr Gerhardt said if Indian companies are able to deliver annual earnings growth of 15-20 per cent, there is further room for stock appreciation on a long-term perspective.

On the risk side, there is no India-specific risk at the moment. But, if the appetite of global investors in emerging markets comes down, it will be a "bigger risk" for India. The rising oil price also has a negative impact on Indian economy, he said.