Accelerated growth in an under-penetrated category
In India, many basic consumer categories have grown rapidly over the last decade. Their distribution networks are now well penetrated and we believe growth is likely to slow. As such, the most attractive growth opportunities are likely to be found in other categories.
We own a leading air-conditioner manufacturer in India, which has a dominant consumer franchise and has strengthened its market share consistently, from 5% in 2011 to 13.5% in FY2023. We have been shareholders of the company for many years and the company recently launched more affordable models and has also entered into adjacent categories such as air coolers, air purifiers and water purifiers. In the coming years these new categories, which also have low penetration rates, could develop into large businesses and become new growth drivers for the company. Given India’s current level of per-capita income, we believe that demand for air-conditioners should start to accelerate and grow significantly over time.
Source: Company Presentations, Kotak Securities, as of 31 May 2023.
Reference to specific securities (if any) is included for the purpose of illustration only and should not be construed as a recommendation to buy or sell the same. All securities mentioned herein may or may not form part of the holdings of FSSA Investment Managers’ portfolios at a certain point in time, and the holdings may change over time.