Barings favours Indian healthcare and telecoms

Following the recent launch of Baring Asset Management’s Dublin-based India Fund, manager Ajay Argal says he’ll be concentrating on healthcare and telecoms stock.

Explaining his investment strategy, Argal says, "There are a number of attractive opportunities in healthcare where firms generally have good cash flow and high earnings visibility. We believe the sector is also attractive from a bottom-up perspective, with India home to a number of world class pharmaceutical companies. Such firms not only enjoy a strong position in the domestic market, but are increasingly exploiting India's cost advantage to expand into the US generics market, which offers huge growth potential.”

And backing up his interest in the Telecom sector, Argal has this to say. “The sector has been hit hard in recent years as consumer-friendly regulations have pushed down prices and hit corporate earnings. However, we are encouraged that the Indian government is now planning to ease the regulatory burden on operators and allow some consolidation in the sector. This should positively impact upon earnings for some of the larger Telecom Services firms. The sector has lagged the rest of the market since the phase of fierce competition started around two-and-a-half years ago but we believe that the competitive dynamics have started to improve with rising prices in the last six months.”

Argal explains that it is his team’s view that Indian Telecom firms will also benefit from the ongoing domestic increase in mobile phone usage. “Even compared to other emerging markets, India has huge growth potential in this area with just 60% of the population owning a mobile phone SIM card. This figure is forecast to rise to 75% just over the next four years. In addition, the sector should also benefit from increasing telecom data usage following the launch of high speed 3G technology. China has already experienced tremendous growth in this area and India appears well placed to follow,” he concludes.