Globe editors have posted this research report with permission of Mawer Investment Management Ltd. This should not be construed as an endorsement of the report's recommendations. For more on The Globe's disclaimers please read here. The following is excerpted from the report:
With India's economy expanding, people earning higher incomes, and the government's provision of housing incentives, many slum and non-slum residents are now buying new, or upgrading their current homes. If people currently living Mumbai slums were to suddenly buy new homes today, there would be a demand of at least 1.8 million housing units. For the entire country? About an extra 10 million to 11 million units per year. In short, there are potentially long runways for companies to compound value in India.
Why does this matter? The first tenet of our equity investment philosophy is to invest in wealth-creating companies – companies that earn a return on capital greater than their cost of capital over time. However, we are also looking for fantastic compounders that not only generate good returns on capital, but also have abundant opportunities to redeploy said capital. It's the combination of these elements I broadly refer to as "growth" opportunities.
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