Kristy Fong, manager of Aberdeen New India Investment Trust, made her first post-Covid trip to India in February 2023, visiting New Delhi, Mumbai and Bangalore. She shares her observations below.


Key Takeaways

India’s growth recovery is back on track, now that Covid-19 is under control. The roads are busy once more, markets are bustling again and people are out and about everywhere. Masks and safe distancing are a thing of the past.

Purpose of the trip

As investors, being on the ground on a regular basis is crucial to get a holistic view of the market, which cannot be achieved with only a virtual presence. The trip was an opportunity to meet companies face-to-face, after three years of mostly Zoom calls, and conduct our due diligence to make more informed decisions around our holdings and exposure to India. It reaffirmed the view that many of our portfolio companies remain in excellent shape, being run by competent management teams.

Highlights from our visit

We met 14 of our holdings on this trip. It was reassuring to hear that companies like the Power Grid Corporation of India and KEI Industries are seeing good capital expenditure growth. We spent a day in Mumbai with the private banks to better understand their exposure to Adani, in light of the conglomerate’s stock market rout. The perception on the ground was that it is not a systemic risk—and prudent measures from the private lenders as well as from the Reserve Bank of India have contained the potential risk well. Further, we saw several non-holding quality companies for potential idea generation. They were good cross-checks for our holdings. Lastly, we did a site visit to the Delhi Aerocity where Prestige Estates is building a hotel and convention centre—an encouraging sign of real estate and infrastructure being built in India. Overall, we observed that India’s strong bottom-up story is intact: Companies that are well run will grow strength-tostrength by gaining share in a growing market.

Prestige Estates has a healthy pipeline of ongoing and upcoming projects, a good mix of residential and commercial properties. After achieving considerable success in South India, the company is venturing out into other states including Mumbai. We were pleased to hear that higher interest rates have not stopped people from buying homes, based on Prestige’s pre-sales numbers. Construction at Prestige’s massive site in Delhi Aerocity is progressing well.
Prestige Estates

City of the future: Delhi Aerocity is part of a new 21st century urban-development paradigm where bustling centres of commerce are being built around airports. Bottom picture shows the artist impression of the Prestige site under construction


KEI Industries: A promising infrastructure play

We met KEI Industries in Delhi, which makes cables and stainless steel wires for various industries including housing construction, manufacturing and power transmission and distribution. Among all of the companies we saw on this trip, we enjoyed this meeting the most. The promoter took us through the ups and downs of the company’s history, which explains why the management today is exceptionally prudent at managing the balance sheet. Not only is KEI debt-free, it has enough cashflow to finance an expansion of its production capacity in order to continue growing. There is a steady stream of domestic and overseas demand for its products. KEI is globally competitive in markets like Australia, US and the Middle East whilst many of its peers outside India lack manpower scale. The highlight of the meeting was an opportunity to see up close the cables and wires they sell in the market. Often when we meet companies, the chance to see their end products is limited, unless they are in consumer-facing sectors. Seeing the cables and wires up close demonstrated well KEI’s value proposition.

Being in India again after three years reminded me how much I missed the sights and sounds whilst travelling around the cities. Visiting companies and being on their office premises in person as well as interacting with locals outside a corporate setting gave me a good snapshot of the reality on the ground. Insights like that are crucial to our investment process.” Kristy Fong, Aberdeen New India Investment Trust manager.


Kristy Fong with the team at KEI Industries



India remains one of the fastest growing countries in the world. It is supported by a relatively stable macroeconomic environment. Public spending, a gradual revival in consumption and the easing of supply chain bottlenecks are likely to partially offset challenges from higher interest rates and a potential global recession. In a pro-growth budget for the 2024 fiscal year, the Indian government once again doubled down on its public capex push, making it a strategic priority to revive growth and create more jobs in the economy before the parliamentary elections next year.

The domestic economy is showing signs of recovery. Inflation has eased to manageable levels in recent months, the Indian rupee is holding up well whilst there is momentum building in real estate. Infrastructure is being built and credit growth is gradually picking up, supported by a favourable policy backdrop. All of this is helping to sustain attractive earnings growth and a recovery in return on equities. On the other hand, India’s external balances remain a little precarious due to relatively high energy prices—India is a net oil importer—and as a result of falling exports. We expect our core quality holdings to continue to deliver resilient compounding earnings growth.

Longer term, India remains an attractive investment opportunity, with a large consumer market, a predominantly young population, an expanding middle class with rising levels of wealth and disposable income as well an increasingly digitalised economy—with over 400 million internet users and rising.

Companies selected for illustrative purposes only to demonstrate the investment management style described herein, and not as an investment recommendation or indication of performance.


Important information
Risk factors you should consider prior to investing:

  • The value of investments, and the income from them, can go down as well as up and investors may get back less than the amount invested.
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Other important information:

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