Neptune has identified a number of mid-cap companies that will gain in India’s disruption-ripe economy. “The banks we met were clear that branchless, digital banking was the future in India, with significant cost-to-income benefits,” he said.
According to Flipkart, an Indian e-Commerce firm, 70% of Indian electronics purchases are made through mobile, representing the highest proportion of any country in the world.
“Investors understand the relative strength of India versus global emerging markets, yet more is now required to drive an absolute return story, which will ultimately come down to an earnings upgrade cycle,” said Desai, who recently visited the country to meet companies.
There are three key questions that loom large for investors, according to Desai.
“Firstly, do Prime Minister Modi’s reform policies still offer hope for investors; secondly, what exactly is required to drive an earnings upgrade cycle; and finally, which areas of the market do we believe are most promising?” he said.
Desai further noted that the government and RBI are maintaining a focus on the self-help story, by continuing to move doggedly in a pro-investment, pro-market direction – and is working closer together than they ever have. “The majority of companies spoke of a demand uptick, with the most optimism in the bearings, engine manufacturers and cement industries,” he said.
