It has taken 70 years for India to Reach 2.5 Trillion Dollar Economy, though India will take only 7–8 more years to reach 5 Trillion i.e. the Total amount of money that was made in the last 70 years would be made again in the next 7–8 Years.
The question is how much will you make?
No doubt that the ones who can catch a few right trends in the next 7–8 years are going to be very very rich.
China took 5 years to double, the 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 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.
Within India, there will be Sector Trends that will change every 3–4 years like:
India Sold a whooping 2 Crore Two Wheelers India V/S 1.7 Crore Two Wheelers sold by China. Interestingly India Sold 33 Lakh Passenger Cars in FY2018 V/S 2.4 Crore in China . Slowly but Surely in the next 10 years, 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 8000 Crores in FY2018.
Overall domestic automobiles sales increased at 6.71% CAGR between FY13–19 with 26.27 million vehicles getting sold in FY19 . Domestic automobile production increased at 6.96% CAGR between FY13–19 with 30.92 million vehicles manufactured in the country in FY19 In FY19, year-on-year growth in domestic sales among all the categories was recorded in commercial vehicles at 17.55% followed by 10.27% year-on-year growth in the sales of three-wheelers.
2. Wealth Management & Investment-
This is one space where the Opportunity is Largest into all Three Spaces i.e. Lending, Protection, and Wealth Management. 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 is just 1800 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, 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.
3. Lending –
The Top 45 Business houses in India are 50% of the Nation’s banking debt even after the 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 is 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 the next 7–8 years. There is an opportunity to grow look book by 3–5x easily.
India’s mobile wallet industry is estimated to grow at a Compound Annual Growth Rate (CAGR) of 150% to reach US$ 4.4 billion by 2022 while mobile wallet transactions to touch Rs 32 trillion (USD $ 492.6 billion) by 2022.
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 a large Market share shift from PSU Insurers to Private companies, we believe Private Insurers can grow 20%+ for a long long time.
The Indian healthcare sector is expected to reach Rs 19,56,920 crore (US$ 280 billion) by 2020. Rising income level, greater health awareness, increased precedence of lifestyle diseases and improved access to insurance would be the key contributors to growth. Health insurance is gaining momentum in India. Gross direct premium income underwritten by health insurance grew 27.49% y-o-y to Rs 5,674.36 crore (US$ 0.81 billion) in FY20 (up to July 2019).
The Government of India is planning to increase public health spending to 2.5 per cent of the country’s GDP by 2025. The health share of Gross Domestic Product (GDP) is expected to rise 19.7% by 2027.
5. Air Conditioners:
Indian summer is not killing you because you are in A/C room right now reading this blog but you will be surprised to know that only 4% of Indian Households own a Air Conditioner, (10% Indian 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 will do a Profit of 650 Crores in FY2018 and has a 20,000 Crores Market Cap. 10 years from today, I don’t know what profits Voltas will make but I am confident that India’s Penetration of Air Conditioners will go up from 4% to at least 15%.
6. Large Format Retail Stores-
There are 3700 Tesco Stores in the UK, 4100 Walmart Stores in the USA where in India, D-Mart has 155 Stores and Big Bazaar 260. Remember The population of the UK is 6 Crores, the Population of the USA is 32 Crores and the Population of India is 125 Crores.
Conclusion –“MORE MONEY WILL BE CREATED IN THE NEXT 7–8 YEARS THAN INDIANS CREATED IN LAST 70 YEARS” There are opportunities to make it large. There will be cyclical ups and downs but smart stock pickers would easily make 10x in the next 10 years.