February 2024India Growth Strategy SPARX India Growth Strategy

SPARX's India strategy offers investors a unique & differentiated exposure to India.

The Indian investment opportunity set consists of a few large caps (a good portion of which, in my view, is non-investable: state-owned entities, commodities, extreme cyclicals, non-top quartile players etc.) and a very long tail of mid & small cap companies. Inspired by SPARX's origins and our expertise in Japanese mid & small cap investment, I believe that mid & small cap companies could be the greatest beneficiaries of India's multi-decadal growth story.

India is at an economic inflection point where rising GDP per capita is going to double the middle class over the next 30 years to over a billion people.

India is a market of oligopolies which will benefit from three major themes over the next 30 years - (i) penetration (ii) formalization and (iii) premiumization. I believe that dominant businesses exploiting these themes will grow much faster than the overall Indian economy - which is expected to be one of the fastest growing economies of the next decade.

In addition to tremendous growth potential, these businesses usually have (i) strong balance sheets and (ii) improving returns on capital supported by margin expansion and improving asset turns.

With focus on dominant businesses in the mid &small cap space at attractive risk-reward levels with a patient long-term approach, we will strive to ensure that SPARX India Growth Strategy contributes to creating long-term profits.

Important Disclaimer

This content has been prepared by SPARX Asset Management Co., Ltd. (SAM) for information purpose only. Certain information contains economic trends and performance, however, SAM does not warrant the accuracy or completeness of such information, and accept no liability whatsoever for any direct or consequential loss arising from any use of this content. The views and opinions contained herein are based on then-current beliefs of the authors and are subject to change without notice. Furthermore, it should not be assumed that past performance is an indication of future results.