Has leeway for equity research in India

India: a wealth of investment opportunities

The interest of foreign investors in this country is correspondingly high. In the first eight months of 2005, overseas funds bought over $ 8 billion worth of Indian stocks. This made all-time highs for the Sensex benchmark index for domestic stocks. The recent growth in India is in large part the result of international reforms initiated in the late 1990s. For example, Indian exports to the EU are increasing by 20% per year, while imports are increasing by 15%. In the past 13 years, the Indian service sector grew by an average of 7.6% a year, while the manufacturing sector only grew by 5.7%. Annual GDP growth should increase by another two to three percent if plans to create decent infrastructure over the next few years bear fruit.

India is young

But there are also demographic reasons for growth in India. India's population is young. 54% of Indians are under 25, 80% under 45. India is also one of the largest English-speaking countries and has the second largest pool of scientists and engineers in the world. Sukumar Rajah, Chief Investment Officer of Franklin Templeton Asset Management (India), recognizes this long-term growth potential and describes Indian stocks as generally undervalued. “Indian stocks are still cheaper than some US or Asian stocks,” he says.

Team with experience

Rajah and his portfolio management team have been managing award-winning funds for the Indian market for many years. The growing interest in the Indian capital market has not escaped them. Yet they still see opportunities. “We invest in stocks from all sectors that we think are cheap and have a lot of upside potential by comparison. We don't focus on a specific segment. Even in the current bull market, India has many interesting and cheap stocks to offer, ”says Rajah.

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Since opening the Indian office in February 1996, Franklin Templeton Investments has grown to become the country's second largest private mutual fund company. It is the third largest ever, after $ 3.76 billion in assets under management at the end of June. Franklin Templeton Investments (India) is also the largest equity manager in the country. This year Franklin Templeton Investments (India) was awarded the “Best Fund House of the Year” award.

September 19, 2005

Ravi Mehrotra,
President, Franklin Templeton Asset Management (India)

Sukumar Rajah,
Chief Investment Officer (Equity), Franklin Templeton Asset Management (India)

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