Sundaram Alternate Assets Picks Key Themes To Bet On India's Growth
India's low-cost solutions to the world and manufacturing push will emerge as growth drivers, according Sundaram Alternate Assets.
India's low-cost solutions to the world and manufacturing push will emerge as growth drivers, according to top executives at Sundaram Alternate Assets Ltd.
India is trying to become an economic super power primarily by offering the world low cost technology solutions, said Vikas Sachdeva, managing director at Sundaram Alternate Assets. This can be attested by payments via UPI, financial inclusion through JAM (Jan Dhan accounts, Aadhaar and Mobile) and the manner in which the largest volume of vaccines were produced during the pandemic, he said in an interview with BQ Prime's Niraj Shah.
As the world recognizes these qualities, it will bring India economic growth and "structural opportunities", according to Sachdeva.
According to Manadanagopal Ramu, the company's fund manager and head-equity, manufacturing is picking up too. "Pre-Covid, India's growth was propelled by the service sector largely and manufacturing wasn't much of a player but now the situation post Covid has changed where manufacturing has become significant to growth."
Areas such as retail, education, health, sports and entertainment can also drive growth in the next five years, he said.
Structural Growth Pillars
Sundaram Alternate Assets listed four main likely pillars of structural.
Financial inclusiveness: Organised lending to a large underserved section of population indicates a big opportunity.
Consumption Czars: Companies with excellent pricing power will benefit from both growing income in urban centres and also retain price increase taken due to recent high inflation levels.
'Phygital' Blue Chips: Traditional bellwether companies that have adopted technology to strengthen their competitive advantage moat further.
Export Voyagers: India’s exports have grown consistently in sectors where we could compete both on cost and skill like information technology and pharma sector over a long period.
"Capital is a bit of challenge in tech and young entrepreneurs are approaching this space with a bit of caution especially with regards to profitability in the medium term perspective," Ramu said.
However, the conviction in emerging entrepreneurs for profitable growth in tech is commendable and makes its lucrative from a long term perspective, he said.
He sees food tech as a high gross margin business, but suggests to wait with pandemic-battered fintech.
He suggests to start looking beyond Nifty to gain the most out of India's growth. Specialty chemicals, banking especially on the retail credit side and consumer discretionary look attractive, Ramu said.
Sachdeva also sees a a huge opportunity in private credit.