India is often considered the most attractive long-term investment opportunity within emerging markets, and arguably among all global markets. With a powerful demographic story, strong institutions, a vibrant democracy, market-friendly policies and an entrepreneurial business culture, India presents immense growth potential. We seek to capture this by investing in “emerging leaders”: companies well-positioned to thrive in a world of rapid change and disruption – disruption that is especially evident in emerging markets.
These emerging leaders are firms with the resources, capabilities and industry positioning to generate outsized economic returns amid rapid transformation within their sectors. They can be either dominant industry leaders adapting to change, or challengers disrupting their industries. They operate in attractive industry structures with strong competitive advantages but crucially have the vision and financial resources to invest for future growth. Unique assets, technological leadership and the difficulty customers face in switching to other suppliers will allow these firms to defend their position while embracing new technologies enables them to secure digital leadership.
Indian companies moving up a gear
ASK Automotive (Mumbai: ASKAUTOLTD) is India’s leading two-wheeler braking system manufacturer, with a 50% market share and long-term partnerships with the top six industry players. The two-wheeler market is rebounding after a downturn, with expected growth of 10%-15% per year for the rest of the decade. ASK has historically outpaced industry growth by increasing market share and expanding its product range.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Given the critical nature of braking systems, barriers to entry in the sector are high, requiring proprietary materials and advanced technology. ASK is also well-positioned for electric vehicles (EVs), which require more aluminium, boosting its growth potential. Strong margins and economies of scale are expected to lift returns on capital from 20%-25% as new capacity ramps up.
Zomato (Mumbai: ZOMATO) is India’s leading food-delivery platform and a major beneficiary of rising digital adoption, urbanisation, and disposable incomes. It has expanded into “quick commerce” (fast delivery of groceries and essentials) through its acquisition of Blinkit, capitalising on a booming market. India’s $600 billion food and grocery sector is dominated by small vendors, creating a massive opportunity for Zomato. The company is rapidly entering smaller cities, with new stores breaking even in just two to three months. While competition is increasing, the potential market is expanding, making growth prospects compelling.
Max Healthcare (Mumbai: MAXHEALTH) is one of India’s top private hospital networks. Despite a population of 1.4 billion, India has fewer than 80,000 private hospital beds, driving demand for quality healthcare. Max is growing through hospital expansions and strategic acquisitions, with plans to increase beds from 6,000 to 8,500 within four years. It dominates high-income regions, such as Delhi and Mumbai, boasting the highest revenue per bed in the industry. With a strong focus on specialised treatments (oncology, cardiology, neurology), Max delivers 30%+ return on capital, with further upside as demand for premium healthcare rises.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
-
Drone company Red Cat Holdings sees shares tumbleRed Cat, the unprofitable and inefficient US drone manufacturer is set to slide
-
Investors should rise with the dawn of the African centuryAfrica has a troubled history and recent years have been difficult. But conditions are ripe for a turnaround in its fortunes – investors should get in early
-
Should you invest in emerging markets?Emerging markets offer strong, long-term growth and excellent value, says Rupert Hargreaves
-
The best ways to invest in Vietnam – Asia’s communist dynamoVietnam has long been one of our favourite markets. The prognosis remains auspicious, says Alex Rankine.
-
India is a new global powerhouse — should you invest?India’s growth rate has slowed recently, but there is still ample scope for investors to benefit from its development.
-
Why Chinese stocks are so far out of favourThere’s little appetite for Chinese stocks despite low valuations.
-
Three companies that dominate their markets with critical productsA professional investor tells us where he’d put his money. This week: Charlie Huggins, manager of Wealth Club’s Quality Shares Portfolio, picks three stocks.
-
Should you continue to hold Smithson Investment Trust?Opinion Smithson Investment Trust, a small- and mid-cap fund, has struggled to live up to lofty expectations, says Rupert Hargreaves.
-
Renewable infrastructure trusts on the road to ruin?Rising discounts and yields for renewable infrastructure trusts reflect the unsustainability of the subsidy system, says Max King.
-
How to find quality and profitability in financial companiesOpinion Julian Cane, manager of the CT UK Capital & Income Trust, picks three financial companies that drive cash flow, dividends and asset value
