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India's leading lights: top managers pick their best stocks

As India celebrates new year with the festival of Diwali, Citywire Selector find out which Indian stocks are blazing a trail in the equity market.

Diwali delights

This week, people in India have been celebrating Diwali, also known as the festival of light. The holiday traditionally marks the beginning of a new business year.

The festival also sees an upswing in economic activity as households make large purchases, including gold jewellery, fridges and even cars.

Beyond the celebratory fireworks and oil lamps, which Indian companies are leading the pack? Citywire Selector asked leading managers for their hottest stocks in the region.

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Healing results

Citywire AA-rated Kunal Desai likes companies that have invested a lot in themselves and that have changed the way they do things.

He has devoted 8.2% of the Neptune India fund to health care and highlighted one particular stock he likes in the space.

’An example would be Apollo Hospitals – the largest hospital company in India. Over the past three years it doubled the number of beds from 6,000 to 12,000. Margins and return ratios collapsed as it went through this expansion phase. That is exactly when I got interested,' Desai said.

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Home comforts

Mike Sell devotes 4.9% of the Alquity Indian Subcontinent fund to real estate firm Oberoi Realty. The Mumbai-based developer is the sixth largest holding in the fund.

‘India has huge demand for real estate. We have been very impressed with the management of Oberoi over the past few years. There are many property companies in India that deservedly have a very bad reputation from a governance point of view. Oberoi is the exception,’ Sell said.

‘They are focused on Mumbai, a city that is growing very rapidly. They are focusing on the suburbs, where people have more money to spend and buy a nice apartment. The valuations are attractive. You have good governance, you have long term growth and management have delivered consistently year after year.’

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Banking on growth

The top holding in the Franklin India fund is Mumbai-headquartered HDFC bank. Citywire AA-rated Sukumar Rajah allocates 9.31% of the fund to the Indian bank. Financials is the largest overall holding in the fund at 34.93%.

‘We have been holding it now for 22 years. The company has become stronger over that time and growth continues to be robust. In the next ten years we think that it will grow anywhere between 15 and 20% with the profitability improving. It is a great stock,’ Rajah said.

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Beautiful returns

Citywire AAA-rated Vipul Mehta, has just 31 holdings in the Nomura Funds Ireland – India Equity fund.

One of these is Emami, which produces a wide range of products including face whitening cream, hair oil and talcum powder.

The manager said that the fund is a benefiting from the increased interest in Ayurveda, a holistic medicinal system. Emami has a strong balance sheet, and its brands have a significant presence in niche areas of the retail market.

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Related Fund Managers

Sukumar Rajah
Sukumar Rajah
113/139 in Equity - India (Performance over 3 years) Average Total Return: 33.82%
Mike Sell
Mike Sell
31/139 in Equity - India (Performance over 3 years) Average Total Return: 54.29%
Kunal Desai
Kunal Desai
96/139 in Equity - India (Performance over 3 years) Average Total Return: 37.97%
Vipul Mehta
Vipul Mehta
6/139 in Equity - India (Performance over 3 years) Average Total Return: 74.69%
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