As the manager of an investment firm based in India, Rahul Saraogi doesn’t get asked to speak at many investment conferences.
The country’s economy has struggled, and its infrastructure lacking. Saraogi says that confidence in India has essentially collapsed. He called to mind a famous Seinfeld scene in calling India “a terrible place to visit” – a comment that drew plenty of laughs from a captive Value Investing Congress audience.
But Saraogi isn’t laughing about the investment opportunity that exists in India right now.
The last time India’s economy was in such a precarious position, it was 2002. Capital investment and markets collapsed from 1997-2002. What happened next? GDP growth accelerated for five years, and Indian markets took off – increasing five-fold until 2007.
Today, currency weakness in India is an opportunity.
“India doesn’t have a currency crisis,” Saraogi said, “it has a confidence crisis.”
Also, everything in India is cheap, trading at 10- to 12-year lows. In Saraogi’s view, the country has just hit the reset button and is on the “first floor of a multistory building.”
Saraogi says it is certain that Indian GDP will grow. The only uncertainty is whether it will happen over the next 12, 24 or 36 months. That makes the risk fairly low. Taking a 20-year view, India looks even better in comparison to the likes of Europe, Japan, China and Brazil.
Over the next 20 years, the U.S. and India loom as the greatest growth opportunities. Saraogi says India’s economy is where America’s was in the 1950s and ‘60s.
One Indian investment opportunity Saraogi especially likes is NMDC. It’s an iron ore producer whose earnings have doubled the last five years and cash has tripled. Despite that, the stock has plummeted.
The company is in the process of doubling its volumes and building more infrastructure. NMDC has no debt, and iron ore is a growing business in India.