Three profitable Indian stocks for long-term growth
Three Indian stocks to buy for long-term growth, as picked by Ayush Abhijeet of the Ashoka India Equity Investment Trust
The Ashoka India Equity Investment Trust follows a bottom-up approach focused on identifying quality Indian stocks with strong returns on capital and attractive valuations. Stock selection is the key driver of performance, supported by rigorous proprietary research, disciplined valuation frameworks and screening of corporate governance.
The portfolio is built with long-term conviction, diversified across sectors but with a bias towards growth opportunities, particularly in small and mid-cap companies – reflecting the belief that India's market inefficiencies create significant opportunities for boosting returns. In this context, we discuss the top three holdings in the Trust: Bharti Airtel, ICICI Bank and Bajaj Finserv.
Three Indian stocks to consider for long-term growth
Bharti Airtel (Mumbai: BHARTIARTL), part of Bharti Enterprises, is India's leading telecoms company, with a presence across wireless, fixed-broadband, enterprise and satellite-television services. The company also operates wireless and mobile-money operations in several African markets and is well positioned to benefit from the improving industry structure and pricing outlook in the India wireless market.
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Execution remains strong across all business lines, underpinned by a disciplined approach to capital allocation and a focus on sustainable returns. Bharti continues to perform well across key operating metrics, which is reflective of the superior quality of its subscriber base.
ICICI Bank (Mumbai: ICICIBANK) is one of the leading private-sector banks in India. Given the under-penetration of credit in the country, the Indian banking sector offers highly appealing long-term growth prospects. Well run private-sector banks such as ICICI Bank are gaining market share from state-owned banks, which still account for around 60% of the overall industry.
The management team has been leveraging ICICI's wide distribution franchise, a new risk-based pricing approach and digital offerings in order to accelerate market share and enhance return ratios. The bank's asset quality, moreover, has also remained robust.
Bajaj Finserv (Mumbai: BAJAJFINSV) is a leading diversified financial-services firm with three key business units: Bajaj Finance; Bajaj General Insurance; and Bajaj Life Insurance. Bajaj Finance is India's leading consumer-lending franchise.
Using its industry-leading technology platform, the company has built a diversified presence across consumer, commercial, rural and mortgage segments, supported by a strong record of prudent risk management.
Bajaj Finance is expected to grow approximately 1.5 times as fast as the overall banking system's credit growth and deliver a return on equity (ROE) of between 20% and 22% over the next few years.
Bajaj General Insurance, the group's multiline general insurance business, is the second-largest and among the most profitable private general-insurance companies in the Indian economy.
Bajaj Life Insurance, the group's life-insurance company, continues to see strong growth and improving profitability. We feel it has the potential to grow to several times its current size over the next few decades.
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