Monday 17 September 2018

The India Investment & Growth Story

First Published in May 18

It has taken 70 years for India to Reach $ 2.5 Trillion Economy, & India will take only 7-8 more years to reach $ 5 Trillion
i.e. the Total amount of Money that was made in Last 70 years would be made again in the next 7-8 Years.
The Question is how much will you make?
We have absolutely no doubt that the ones who can catch a few right trends in next 7-8 years are going to be very very rich.
China took 5 years to double its GDP,
US took 10 years to double from $2.4 to $5 trillion,
it is estimated that India will take 7 years to get there.

The Idea is simple, there will be 100’s of entrepreneurs & businesses out there who will increase their profit 10-15x from current levels,
they will grow at 30-40% and we need to back them.

The Biggest Trend is India. The biggest growth story is India!
Within India there will be Sector Trends that will change every 3-4 years like:
Automobiles
India Sold a whooping 2 Crore Two Wheelers V/S 1.7 Crore Two Wheelers sold by China.
Interestingly India Sold 33 Lakh Passenger Cars in FY2018 V/S 2.4 Crore two wheelers.
Slowly but Surely in the next 10 years, with the 2 wheeler owner upgrading to 4 wheeler, we are confident that India will sell 1 Crore+ Cars and the average ticket size of a car would also Increase rapidly.
Out of these 33 Lakh Cars, more than 50% i.e. 18 Lakh Cars were sold by Maruti alone. Maruti has a Market cap of 2.6 Lakh Crores and did Profit of about Rs8000 Crores in FY2018.
The Indian automotive Industry has the potential to generate up to US$ 300 billion in annual revenue by 2025, create 65 million additional jobs and contribute 10 -12 % to India’s GrossDomestic Product as compared to 7% at present.
Financials
This is one space where the Opportunity is Largest in all the Three Verticals i.e. Lending, Protection and Wealth Management.
Lending – The Top 45 Business houses in India are 50% of Nation’s banking debt even after nationalization of banks.
The Top 20% of India is well banked and Opportunities are now on the lower ticket size retail lending (80% of Population).
With Upsurge of MFI, SME Lending, consumer finance, affordable home loans, Retail Credit is a big trend which are typically small ticket size loans with higher NIM spreads.
India’s Credit needs will grow at 15-16%, whereas Smart private Bankers/NBFC can grow faster at 20-30% easy for next 7-8 years.There is an Opportunity to grow loan book by 3-5x easily.
Protection – This Again is a multiyear theme, from Life to Auto insurance to Health, to crop, to even your cellphone.
Here not only there will be Growth of 15-17% in the general Market but there will be large Market share shift from PSU Insurers to Private companies, we believe Private Insurers can grow @ 20%+ for a long long time
.
Wealth Management & Investment
We Strongly believe that Markets are underestimating the financialization of savings as a theme, the total Profit pool of top 5 Asset management companies (57% Market Share) in India was just Rs1800 Crores in FY2017.
The Profit Pool is so small that one midsized popular hedge fund, Pershing Square, made more Profit than the Entire Indian Asset Management Industry.
We have absolutely no doubt that the Profit Pool will grow multi fold in next 5-10 years and there will be massive wealth Created in this space.
Consumer Durables & FMCG
Just to illustrate, we shall take the example of just one industry,
Air Conditioners – we hope the Indian summer is not killing you because you are in an A/C room right now reading this but you will be suprised to know that only 4% of Indian Households own a Air Conditioner, (10% Indian households own Air-Cooler) whereas 85% of Indian Household have fans.
In China the Penetration of Air conditioners grew from 8% in 1995 to 70% in 2004.
Voltas is the Market Leader with 24% Market share in A/C in India and Sold 10 Lakh Air conditioners this year and had a Profit of Rs 650 Crores in FY2018 and has a 20,000 Crores Market Cap.
10 years from today, we don’t know what profits Voltas will make but we are confident thatIndia’s Penetration of Air Conditioners will go up from 4% to at-least 25%.
The same can be said about most other consumer durables and FMCG products.
The doubling of GDP will also lead to doubling of per capita income & the per capita income is expected to expand from $ 1862 at present and reach close to
$ 4000 by 2025.

What it essentially means is that an average family of four will have a monthly income of Rs 1 lac by 2025.
As the incomes rise & disposable surplus increases, % spend on basic necessitiescomes down and spends on personal consumption, low cost housing, autos, entertainment etc will go through the roof.
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The Retail market in India is estimated to reach US$ 1.1 trillion by 2020 from US$ 672
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billion in 2016, with modern trade expected to grow at 20 per cent - 25 per cent per annum,
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which is likely to boost revenues of FMCG companies
Rural consumption has increased, led by a combination of increasing incomes and higher aspiration levels; there is an increased demand for branded products in rural India. The rural FMCG market in India is expected to grow at a CAGR of 14.6 per cent, and reach US$ 220 billion by 2025 from US$ 29.4 billion in 2016.
On the other hand, with the share of unorganised market in the FMCG sector falling, the organised sector growth is expected to rise with increased level of brand consciousness, also augmented by the growth in modern retail.
Another major factor propelling the demand for FMCG in India is the growing youthpopulation, primarily in the country’s urban regions.
Online portals are expected to play a key role for companies trying to enter the hinterlands. The Internet has contributed in a big way, facilitating a cheaper and more convenient means
to increase a company’s reach. It is estimated that 40 per cent of all FMCG purchases in India will be online by 2020, thereby making it a US$ 5-6 billion business opportunity. By the year 2025, e-commerce will contribute around 10-15 per cent sales of few categories in the FMCG sector.

Conclusion:
“MORE MONEY WILL BE CREATED IN THE NEXT 7-8 YEARS THAN INDIANS CREATED IN THE LAST 70 YEARS”
There are opportunities to make it large.
There will be cyclical ups and downs but smart investors would easily make 10x in next 10 years.
Don’t Miss this BIGGEST TREND EVER. Start your investment today,
Convert from a saver to an investor.
Mutual Funds offer you the best opportunity to enter this market & reap the benefit. Do you know that there were more than 25 mutual funds who multiplied the Investors money more than 25 times in the last 15 years & are poised to repeat the same phenomenon in the next 10 years.
Let the professionals handle your investment & take care of the risks and sector calls.
Step forward, take the call.
Meet your Financial Advisor & Start your SIP today.

Happy investing!

Mutual Funds are subject to market risks, please read offer documents or consult your
Advisor before investing

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