Three ways to share in India’s success story

published 16 March 2018

Each week, a professional investor tells us where he'd put his money. This week: David Cornell of the India Capital Growth Fund selects three promising growth plays.

Investors should always scan the whole horizon for investment opportunities. They certainly should not miss India, which is the world's sixth-largest economy with a population of 1.3 billion, second only to China. The economy is growing at around 7% a year (the UK is managing 1.8%) and the Indian stockmarket boasts more than 5,000 listed companies compared with the 2,600 in the UK.

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Buying Indian shares directly is difficult for UK investors, due to regulatory hurdles and a highly bureaucratic process. Buying an Indian equities fund is easier, particularly an actively managed investment trust, which allows the manager to buy long-term holdings without fear of having to sell in a hurry to fund redemptions. The Indian small- and mid-cap sector is a fertile hunting ground for growth and there is a broad range of investable sectors. However, make sure the manager you choose has people on the ground in India who understand the local market.

Kajaria Ceramics (Mumbai: KJC) makes ceramic and vitrified tiles in a market that has grown 15%-16% a year over the last five years. But penetration is still low and demand should flourish as consumer aspirations rise and commercial development increases, and also as a result of Indian government initiatives on railway modernisation and the "Clean India" campaign. Kajaria has industry-leading profit margins due to a low proportion of imports, high sales to retail customers, and a superior product mix. We anticipate further shifts up the value chain, leading to stronger profits.

Dewan Housing Finance (Mumbai: DEWH) is India's third-largest private-sector housing finance company. It operates in more than 350 locations across the nation, specialising in low- and middle-income borrowers. The long-term prospects for mortgage lending in India are good due to low penetration of housing loans and the falling cost of capital. The low-income segment enjoys little competition, as establishing a network is time consuming.

David Cornell has extensive experience in asset management, with a particular interest in emerging markets.

David lives in London these days, but previously lived in Mumbai, where he was the principal advisor at Ocean Dial Advisers Asset Management, an India-focused investment company, and manager of th eIndia Capital Growth Fund.

In 2013 David became the MD and CIO at Ocean Dial. He held this title for nine years, in which time he successfully increased the growth and profitability of the business.

David graduated from the University of Durham with a degree in English and history.

Before beginning his investment career, David served as a captain in the British Army.