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During our recent trip to India, we were fortunate to visit the contrasting cities of Delhi and Chennai. This being India’s year to host the G20 summit means Delhi is the showcase for arriving world leaders to see what this great emerging economy has to offer. The city is incredibly clean and green, despite the heat, and gives off an air of efficiency. Chennai, on the other hand, is chaotic and less showy than the capital city. Located in the south of India, it is still a thriving coastal city, home to many industrial businesses. We noticed a real ‘can-do’ attitude about the place, and a palpable sense of national self-confidence when we met companies.

It is clear that India is firing on all cylinders. In our full piece below, we discuss why, based on observations and discussions from our trip. Interesting points include:

  • At the same conference as last year we noticed a lot more foreign investors – in fact, there was an 80% larger turnout this year versus 2022. This is unsurprising given that the main stock market index, the Sensex, has traded sideways for a year, and earnings have had a chance to catch up. This means valuations look more palpable now, even if they are still at a premium to global averages.
  • In Chennai, the companies are looking forward and thinking about scaling their businesses, both domestically and internationally. Partnerships are underway with many major U.S. and European industrial groups to help them move up the value chain away from the low-end metal bashing businesses that India has been renowned for, and more able to compete on the international stage.
  • We visited an EV charging station where we found out how 3-wheelers – usually rikshaws and taxis – are used in the last mile delivery logistics networks of many large e-commerce companies, such as Amazon, Flipkart and Zomato. We also made a trip to one of India’s leading private hospital chains and were impressed with its volumes and success rates.
  • Logistics – which has been a major problem in India and the reason why India has not seen more FDI until now – has had a major boost. India’s railway network has experienced an unprecedented level of investment. Under Prime Minister Modi, this last decade in India has seen more railway tracks laid than in the entire time since independence in 19471.
  • Domestic investor flows have been very strong and domestic mutual funds are pumping in USD20-30 billion per annum through the systematic investment plan (“SIP”)2. This is therefore a more institutionalised and more disciplined way of investing, giving a sense of stability. It is a long-term structural story and can sustain for several decades, in our view.

Other favourable factors currently include rapid FDI, a robust banking sector, and inflation under control, with the CPI at 4.7% year-on-year3 and coming down.

We finished our trip buoyed up by the positive attitude of the people, having indulged on delicious curries and dosas, and asking optimistically, ‘Is it finally India’s decade?’

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1 Bank of America, BofA Securities “Equity Strategy – India. India Pollution Primer”, November 2020.
2 Source: Government of India, Jefferies.
3 Source: RBI, April 2023.

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