The Energy Opportunities Fund is banking on the booming energy sector.
The energy sector is abuzz with activity. AS new oil and gas finds are announced from the Krishna-Godavari basin, Cauvery Delta and in the North East by various private and public sector companies, the Indian energy scenario is slowly changing.
The government, too, is encouraging exploration activities. Gas supplies will increase by 100 per cent over the next two years. All this bodes well for companies operating in the sector.
A new fund launch from Sundaram BNP Paribas, the Energy Opportunities Fund, plans to capture the growth by investing in companies that will benefit from the expansion taking place in the oil and gas sector.
Among the sectors the fund will invest in include the energy producers, the capital goods producers that will provide the basic energy infrastructure, manufacturers of pipes and distribution networks, and the end-users and energy-intensive segments such as cement and fertilisers.
Opportunity in Energy
The fund has about 250-300 companies as potential investments with a combined market cap of around Rs 20 lakh crore. However, the fund will have a large-cap tilt as many companies operating in this segment are large caps.
The fund is a closed-end fund for a period of three years and will convert into an open-end fund thereafter. The fund manager sees good opportunity for wealth creation from companies operating in this segment.
Says Krishna Kumar, Head (Research) and Fund Manager, Sundaram BNP Paribas Mutual Fund: “There’s a strong visibility of earnings in some of these companies going forward, and we believe that the sector is poised to do well.” Some stocks in this segment are trading at high P-Es, but there’s still enough scope for wealth creation.