For Kenneth Andrade, the next decade of growth will be like the '90s after India's economy opened. The only thing different will be the sectors driving it.
Opportunities for investors stand closer to where they were in the past but with slightly different ground realities, Andrade, chief investment officer at Old Bridge Capital Management Pvt., said in an interview with BloombergQuint's Niraj Shah.
In the '90s, India created large industries that had the capability of being category leaders globally in information technology, pharmaceuticals and chemicals, he said. Some of the small export-oriented companies became big.
A similar trend can play out this decade for a different set of sectors, according to Andrade. Those, he said, are likely to be textiles, engineering exports and other Indian companies manufacturing for the world.
"In the last 30 years of my investing career, I have not seen a textile business which is debt-free." A lot of Indian companies in the category can now pursue growth because the balance sheet aids them, he said.
"You can't own the world trade, but you can definitely dominate a couple of categories," he said. And the driving force, he said, will be how countries, including India, capture China's share.
Companies worldwide are diversifying their supply chains outside China after the pandemic-driven disruption.
The global capex cycle will then benefit Indian firms, he said. And while he runs the risk of picking such potential winners too early, Andrade said valuations offer cushion from downside.
Andrade doesn't want to invest in established businesses. “A discovered business has the valuation but then I have to take the execution risk, which I'm not capable of doing.”
He, however, expects multiyear growth for IT, but isn't betting on two-wheelers as competition intensifies. He remains underweight on financials and is overweight on select metal companies.
Watch the full conversation here:
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