India Takes Decisive Step: Implementation Announced
From Wall Street to Bangalore: Exploring Fairfax India - A Hidden Gem in India's Mid-Cap Market By Michael Braun Alexander
India is set to become the world's most populous nation by 2030, with around 1.43 billion people. Despite a current economic slump, India's potential as a long-term investment prospect is undeniable. With an expected growth rate of 6-7%, India stands out among all G-20 countries as the most dynamic economy for the foreseeable future.
However, direct access to mid-cap Indian stocks, known for their attractive valuations, is limited for investors in the EU. To bridge this gap, Toronto-based Fairfax India Holdings, founded in 2014, offers an interesting opportunity. This holding focuses on mid-cap Indian stocks and private equity investments, covering key sectors like banking, infrastructure, logistics, chemicals, and agriculture.
The crown jewel in its portfolio is the majority stake in Bangalore International Airport Ltd. (BIAL), which handles over 16 million passengers annually and is the third-largest airport in India. Despite a challenging stock market year in 2022, Fairfax India made an effort to turn the tide, and the broader Indian market has already shown signs of recovery.
The Q1 2025 earnings report for Fairfax India reveals a net loss of $211.2 million ($1.57/share), which, while improved by 28% compared to Q1 2024, still leaves room for improvement. The company's book value per share has declined by 7.4% to $19.41 due to unrealized losses on its publicly listed Indian equity holdings. This underlying vulnerability to market volatility is an important consideration for potential investors.
However, the current price of Fairfax India's stock, at under ten euros, results in an extremely low single-digit price-to-earnings (P/E) ratio. The management is actively addressing this unique situation by purchasing large quantities of its own shares at a discount, making the stock an appealing value investment. The security is tradable in Germany but with low volumes, so limit orders are recommended.
Investing in Fairfax India offers an attractive opportunity for those looking for growth prospects in the mid-cap Indian market. However, it's crucial to keep in mind the risks associated with concentration in mid-cap stocks and the company's reliance on the volatile Indian market. As always, thorough research and a solid understanding of the risks involved are key to informed investing decisions.
- With limited access to mid-cap Indian stocks in the EU, Fairfax India Holdings, based in Toronto, presents an intriguing opportunity for investors, as it focuses on mid-cap Indian stocks and private equity investments.
- One of the standout investments in Fairfax India's portfolio is its majority stake in Bangalore International Airport Ltd. (BIAL), a key player in India's infrastructure sector that handles over 16 million passengers annually.
- Despite a challenging stock market year in 2022, Fairfax India made strides to recover, and the broader Indian market has shown signs of recovery as well.
- The current low price of Fairfax India's stock, around ten euros, leads to a minimal single-digit price-to-earnings (P/E) ratio, making it an appealing value investment, especially considering the management's plan to purchase large quantities of its own shares at a discount.
