By Reneska Moodley
Shailendra Kumar, the Co-Founder and Chief Investment Officer at Narnolia Group, a leading research-driven fund management and investment advisory firm in India, attended and sponsored the 4th India-Africa Entrepreneurship & Investment Summit (IAEF) in Mauritius. At the Day one of the Summit, Kumar presented on how in the recent years, India has emerged as a dynamic force in the global economy, driven by a robust growth trajectory and transformative reforms. As investors seek to capitalise on this burgeoning market, the GIS Narnolia Emerging India Fund stands out for its exceptional performance and strategic focus.
Since its inception in 2015, the GIS Narnolia Emerging India Fund has demonstrated remarkable returns, focusing on the immense potential of India’s growth. Unlike indices like Nifty, which concentrate primarily on large-cap stocks, this fund targets mid-cap, small-cap, and even some unlisted companies poised for rapid expansion. Investors have seen returns increase by a staggering 4X since 2015. This performance starkly contrasts with the MSCI Emerging Market Index, which has remained largely stagnant over the same period. While $100 invested in the MSCI index in 2015 would still be worth about $100 today, an equivalent investment in Nifty would now be worth approximately $200. However, the GIS Narnolia Emerging India Fund has doubled that amount, highlighting the extraordinary potential of well-chosen investments in the Indian market.
To understand this impressive growth, it is essential to look at India’s economic journey. In the 1960s, India contributed 3.5% to the world GDP. However, by 1991, this share had dwindled to just 1.9%. Post-1991 reforms have brought India back to a 3.5% share of global GDP, indicating not just growth but a recovery to its former standing. Now, the focus shifts from recovery to genuine growth, and this shift is expected to yield substantial opportunities for investors over the next 25 years.
Vision 2047: A Developed India
The concept of “Viksit Bharat@2047” encapsulates India’s aspiration to match the global average in per capita income. Currently, India’s per capita income is around $3,000, far below the global average of $12,000. By 2047, it is projected that the global average will rise to $21,000, and India aims to match this, indicating a 9X growth from current levels. This substantial increase reflects the potential for long-term investment returns in the country.
Key Growth Sectors
Identifying the sectors that will drive this growth is crucial for investors. Here are the nine sectors poised for substantial expansion:
- Auto Components: Currently holding just 1.7% of the global market share, India’s auto component sector is projected to generate an additional $390 billion in the next decade.
- Communication Equipment: With global shifts away from Chinese equipment, India stands to gain significantly in this sector.
- Semiconductors and Electronics: The growth in these areas will be substantial, aligning with the global demand for advanced technology.
- Infrastructure Equipment: As India invests heavily in infrastructure, companies manufacturing the necessary equipment are set for considerable growth.
- Professional Services: Formalization and professionalisation of businesses are driving new growth opportunities, particularly in sectors like healthcare and engineering.
- Engineering, Procurement, and Construction (EPC): Companies like Larsen & Toubro, which lead globally in EPC, exemplify India’s potential to dominate this sector.
- Tire Manufacturing: Companies like Balakrishna Industries are already among the top global players, with further growth anticipated.
- Telecom Services: With significant advancements and increasing market share, this sector offers robust investment opportunities.
- AI and Technology: As AI becomes increasingly integrated into various sectors, Indian companies are well-positioned to capitalise on this trend.
Opportunities for Foreign Investors
The professionalisation of Indian businesses is another key factor driving growth. With more companies adopting professional management structures, the potential for consistent and sustainable growth increases. Investors should look for companies with strong, skilled leadership teams, as these firms are likely to deliver superior returns.
Future Outlook
The journey from recovery to growth presents a unique opportunity for investors. The sectors highlighted above are just a glimpse into the vast potential within India’s economy. As the country continues to professionalise, innovate, and expand its global footprint, the opportunities for wealth creation are immense.
In conclusion, while every growth story has its cycles, India’s economic trajectory suggests a prolonged period of substantial growth. For investors looking to capitalise on this opportunity, understanding the key sectors and the broader economic trends is crucial. The GIS Narnolia Emerging India Fund exemplifies the potential returns from strategic investments in India’s burgeoning market, providing a promising avenue for those looking to benefit from the country’s continued ascent on the global stage.
