Indian companies, particularly in relatively under-owned sectors like infrastructure and utilities, continue to exhibit robust earnings growth, according to GQG Partners deputy portfolio manager Siddharth Jain.
“The biggest sector by far within our India exposure is that infrastructure segment,” he told InvestorDaily.
While GQG invests in infrastructure assets around the world – in the US, Europe and Latin America – the fund manager is particularly constructive on India’s infrastructure sector for three key reasons.
“First is that this is the fastest-growing infrastructure market in the world, and the growth has structurally accelerated … versus the pre-COVID rate,” Jain said, adding that the utilities segment is expanding two to three times faster than in Western markets.
According to data, India’s infrastructure sector is projected to grow at a compound annual growth rate of approximately 9.57 per cent between 2025 and 2030, reaching an estimated market size of US$353.11 billion by 2030.
This growth is driven by factors such as rapid urbanisation, population growth and significant government investments in transportation, energy and digital infrastructure.
Jain explained that India’s second major drawcard, particularly for foreign investors, is its more favourable regulatory environment, with the country having implemented “very favourable pro-business policies” to accelerate private sector investment.
Namely, the Indian government has recently established a transparent and investor-friendly FDI policy, allowing 100 per cent foreign investment under the automatic route in most sectors.
Regarding infrastructure in particular, the India Brand Equity Foundation (IBEF) has, in recent years, identified infrastructure support for manufacturers as a key national priority.
Earlier this year, IBEF said: “The infrastructure sector is a key driver of the Indian economy.”
“The sector is highly responsible for propelling India’s overall development and enjoys intense focus from the government for initiating policies that would ensure the time-bound creation of world-class infrastructure in the country,” it added.
The third compelling factor working in India’s favour, according to Jain, is the valuations.
“A lot of people like to complain about how expensive India is, but this is one area where you’re actually trading at similar valuations to Western utilities, but growing materially faster,” he said.
For GQG, India’s infrastructure boom is a long-term investment play – when the fund manager invests, it does so with a minimum five-year horizon in mind.
“The growth opportunities ahead are massive, right? I mean, if you think about the airport sector, which we’re very positive on, roughly less than 10 per cent of the population has stepped foot on an airplane. It’s a roughly 1.5 billion population,” Jain said.
“Bombay [and] Delhi are the two big travel hubs within India. Currently, they both have just one airport, but this summer, both cities will open up a second airport each. How many other countries in the world, or major cities in the world, are opening multiple airports? It’s a very unique set-up here.”
Turning to how Donald Trump’s tariff policies are impacting the region, Jain said, “India will definitely be less relatively impacted versus most Asian countries.”
Namely, while India was initially hit with a 26 per cent reciprocal tariff on “Liberation Day”, this was subsequently reduced to 10 per cent pending further negotiations.
But markets generally agree that, while the US is one of the primary export destinations for India’s goods, the country is well-positioned to prosper under Trump’s protectionist regime.
Of particular note is the fact that India’s domestic consumption accounts for some 70 per cent of its gross domestic product (GDP), which is expected to persist over time given its “demographic dividend”, coupled with increasing urbanisation.
The region also boasts a fast-growing middle class – surging 14 per cent in the last decade.
“This has been a domestic consumption story, not a manufacturing exports story in the way Korea and China have been, historically,” Jain said.
Expanding on other promising sectors within the world’s fifth-largest economy, GQG is also positive on telecom companies.
“Bharti Airtel [telco] has been a large position for us, where, if you go back 10 years ago, Indian telecom had over a dozen players. We’ve seen massive consolidation and bankruptcies,” Jain said.
“So now there’s basically only two and a half players, and all three players are raising pricing pretty aggressively. And so it’s a hyper-consolidated market, you have strong subscriber growth and pricing going up.
“So Bharti Airtel – I think in a five-10 year view – we wouldn’t be surprised to see this become the biggest wireless telecom company in the world.”
GQG is not the only fund manager bullish on India, with VanEck recently telling InvestorDaily it, too, considers its domestically focused economy as well-positioned to prosper in the current global environment.
Namely, the ETF provider last week launched its India Growth Leaders ETF (ASX: GRIN), which aims to offer investors targeted exposure to a portfolio of high-growth Indian companies.
Divulging on the opportunity set the firm sees in the region, VanEck’s APAC chief executive and managing director, Arian Neiron, told InvestorDaily not only will India remain somewhat insulated from the flurry of tariff announcements, its economic growth is a longer-term play.
As one of the fastest-growing economies in the world, it has doubled in size over the last decade, growing from $2.1 trillion in 2015 to a projected $4.27 trillion by 2025, and its growth trajectory is expected to continue.
Citing IMF data, Neiron said India will clock a growth rate of 6.5 per cent over the next five years, during which time it is expected to double its current GDP of $3.5 trillion to $7 trillion. By 2028, it is expected to overtake Germany as the world’s third-largest economy after the US and China.
