What to look for if you are betting on the capex theme? Gurmeet Chadha answers

“In APIs, we are seeing companies doing capex which they have not done in the last two decades. So Divi’s and Laurus Labs are probably doing more capex in the next two to three years than they have done in the last two decades. Defence is another big opportunity,” says Gurmeet Chadha, Co-founder & CEO, Complete Circle Consultants

What is the outlook on betting on the capex theme? That seems to be one of the top favourites. There are a lot of sectors that would be closely linked to it – infrastructure, capital goods space and cement. How would you play this theme?
We look at it in a slightly different way which is manufacturing led opportunities either due to import substitution of China plus one or due to PLI and then the capex happening. We have a slightly broader canvas here. We are clearly seeing that opportunity in chemicals and in electronic manufacturing services or EMS. The industry can grow from $75 million to $300 million.


In fact there is a note that our mobile exports can actually become 5x and we have seen a lot of action there not only just in mobiles but in the migration which has happened from OEMs to ODMs like Dixon Tech. Also we are seeing that in chemicals selectively, especially with companies into fluorination where somebody like Gujarat Fluorochemicals which is basically into fluoropolymers and Navin which is more into intermediates and CRAMS kind of an opportunity.


Similarly, in APIs, we are seeing companies doing capex which they have not done in the last two decades. So Divi’s and Laurus Labs are probably doing more capex in the next two to three years than they have done in the last two decades. Defence is another big opportunity we are seeing across and it is not just confined to ammunition but in drones, surveillance and command systems etc.