Something remarkable is happening in India: an entire economy is modernising and growing at pace. At India Capital Growth Fund, we seek the small and medium-sized Indian stocks that can ride this wave: firms with capable management, clear competitive advantages and the ability to compound earnings at 15%-18% throughout economic cycles.
We are agnostic yet selective when it comes to sectors. India’s market is vast, with nearly 600 companies above $1 billion in market value across every major industry. That breadth allows us to say no often. We avoid firms driven by global commodity swings; opaque or over-indebted operators; and sectors where concerns over governance or state ownership can lead to instability.
Instead, we run a concentrated portfolio of between 30 and 35 Indian stocks, buying businesses that are leaders in their categories and holding our highest-conviction positions for up to five years.
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The economic and political backdrop has rarely been more supportive. A young, expanding population continues to fuel consumption, while both government-led infrastructure investment and capital expenditure by the private sector are accelerating.
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Policy reforms have steadily improved the business environment, with the government targeting annual GDP growth beyond 7%.
Geopolitically, India has been making waves too, signing seven free trade agreements in the past 18 months alone. India is firing on all cylinders. Our edge is to find the emerging leaders early, back them with conviction, and let time do the heavy lifting.
A burgeoning marketplace for Indian stocks
Multi Commodity Exchange (Mumbai: MCX) is India’s dominant marketplace for trading metals and energy products. The power of the model lies in its scale: more activity attracts more traders, and more traders bring better liquidity. There is ample scope for long-term growth. Commodity markets are still maturing in India, with more participants entering and new products being rolled out. Periods of global volatility have also increased demand for hedging tools. MCX benefits directly from this growing depth, while its upgraded technology platform provides operating leverage as volumes rise. It remains a steady, structural-growth story in a market still early in its development.
Aether Industries (Mumbai: AETHER) is a speciality-chemicals company that works with global customers to develop and manufacture complex, high-value molecules.
It is a firm led by research and development: clients often come to Aether with a challenging process, and the company helps convert it into something that can be produced reliably at scale.
Its strength lies in its niche expertise. It focuses on specific chemistry-driven processes that are difficult to replicate, creating deep, enduring relationships with clients in sectors ranging from pharmaceuticals to advanced materials. As global supply chains diversify toward India – and companies look for partners who can deliver both innovation and capacity – Aether is well positioned to benefit.
CCL Products (Mumbai: CCL) is one of the world’s largest producers of instant coffee, supplying customised blends to both supermarket and established brands across more than 80 countries. You may not see its name on the shelf, but its blends sit behind many familiar offerings.
CCL’s edge is built on scale, consistency and flexibility. It sources beans worldwide, processes them in India and Vietnam, and creates bespoke blends tailored to each customer. It boasts more than 1,000 total variations, keeping clients loyal and providing a stable, cash-generative base.
In addition, CCL is building its own brand in India, which is gaining early traction. It is a dependable business with a high-growth option embedded within it.
India’s growth isn’t a single story. It’s thousands of companies formalising, scaling and professionalising. Our edge is to find the emerging leaders early, back them with conviction, and let time do the heavy lifting.
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