Indian stocks are in high demand
Gaurav Narain, an expert investor with the India Capital Growth Fund, lists three of his favorites here.
India's economy is modernizing and expanding at a rapid rate, which is a remarkable development. Small and medium-sized Indian stocks with competitive advantages, competent management, and the capacity to compound earnings at a rate of 15% to 18% over the course of economic cycles are what we look for at India Capital Growth Fund.
When it comes to sectors, we are both agnostic and selective. With almost 600 companies in every major industry with a market value of more than £1 billion, India's market is enormous. We are able to say no frequently because of its breadth. We steer clear of businesses that are influenced by fluctuations in the price of commodities globally, opaque or overly indebted operators, and industries where issues with state ownership or governance could cause instability.
Rather, we manage a focused portfolio of 30 to 35 Indian stocks, purchasing companies that lead their respective markets and retaining our strongest positions for a maximum of five years.
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Launch your trial The political and economic environment has never been more favorable. Consumption is still fueled by a young, growing population, and both government-led infrastructure investment and private sector capital expenditure are rising.
The business environment has gradually improved as a result of policy reforms, and the government is aiming for GDP growth of more than 7% annually.
In terms of geopolitics, India has also been making waves, having signed seven free trade agreements in the last 18 months. India is operating at maximum capacity. Finding the up-and-coming leaders early, supporting them with conviction, and letting time do the heavy lifting gives us an advantage.
A growing Indian stock market.
The leading marketplace in India for the exchange of metals and energy products is Multi Commodity Exchange (Mumbai: MCX). The model's strength is its scale: increased activity draws more traders, and more traders improve liquidity. There is plenty of room for long-term expansion. India's commodity markets are still developing, with new products being introduced and more players joining the market. The demand for hedging tools has also increased during times of global volatility. This increasing depth directly benefits MCX, and as volumes increase, its improved technology platform offers operating leverage. In a market that is still in its infancy, it continues to be a consistent, structural-growth narrative.
Aether Industries (Mumbai: AETHER) is a specialty chemicals company that develops and produces complex, valuable molecules for clients around the world.
Research and development is the company's primary focus. Clients frequently bring difficult processes to Aether, and the company assists in transforming them into something that can be reliably produced at scale.
Its specialized knowledge is what makes it strong. It focuses on particular chemistry-driven processes that are hard to duplicate, building strong, long-lasting connections with customers in industries like advanced materials and pharmaceuticals. Aether is in a good position to gain from the diversification of global supply chains toward India and the search for partners who can provide both capacity and innovation.
One of the biggest manufacturers of instant coffee in the world, CCL Products (Mumbai: CCL) supplies specialized blends to supermarkets and well-known brands in more than 80 countries. Its blends are behind many well-known products, even though you might not see its name on the shelf.
The foundation of CCL's edge is flexibility, consistency, and scale. It sources beans from all over the world, processes them in Vietnam and India, and crafts custom blends for every client. With more than 1,000 variations, it maintains a steady, profitable base and retains customers.
In India, CCL is also developing its own brand, which is starting to gain traction. It is a solid company with a high-growth potential.
India's development is a complex narrative. It is formalizing, growing, and professionalizing thousands of businesses. Finding the next generation of leaders early on, supporting them with conviction, and letting time take care of the rest is our advantage.
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