Baron India Fund

Bharti Airtel Limited (BHARTI.IN) is a leading telecommunications company, with operations in 18 countries across Asia and Africa. The company's offerings include wireless, mobile commerce, and fixed line. 
Bharti is a top three player in the Indian telecommunications industry. With more than 30% market share, it is well positioned to benefit from rising smartphone penetration and 4G services in India. The company should continue to gain market share from Vodafone India, which is on the brink of bankruptcy and will likely need to raise mobile tariffs by more than 50% to remain a viable entity. We expect earnings to generate mid-teens growth over the next three to five years, with further upside from its broadband and enterprise businesses.

Backed by the Tata Group, Trent Limited (TRENT.IN) is a leading direct-to-consumer retailer in India that sells private label apparel through its retail chains. It reported $1 billion in revenue for fiscal 2024 and operates over 750 Westside and Zudio stores across 150 cities in India.
Trent is a differentiated apparel company focused on product quality, a pricing strategy without promotion, and supply chain management, which translates into quality like-for-like (LFL) growth. The company is expanding its Zudio value fashion retail chain, and we estimate that Zudio store count could reach more than 1,000 in the next five years. We believe double-digit LFL growth and store expansion could drive 25%-plus topline growth. Operating leverage and franchise growth should further aid margin expansion and drive 30%-plus EBITDA CAGR in the years ahead.

Reliance Industries Limited (RELIANCE.IN) is India's leading conglomerate, with business interests that include oil refining, petrochemicals, media, telecommunications, and retail.
We believe Reliance is positioned to leverage its telecommunications network to transform into a digital services company, offering products such as video streaming, broadband, and e-commerce services. The company is also laying the groundwork to create an online marketplace that will connect over 12 million mom-and-pop retailers to over 400 million mobile and internet subscribers. We believe earnings will sustain high double-digit growth over the next three to five years.

Indus Towers Limited (INDUSTOW.IN) is a leading telecommunications tower operator in India. The country's tower industry is a duopoly, with Indus and a competitor accounting for about 60% of the market share.
Indus is a key beneficiary of industry consolidation and the rollout of 5G services by telecommunications providers. Given recent improvements in financial viability, Vodafone Idea (VI), a key customer of Indus, has resumed monthly payments and should be a re-rating catalyst for Indus’ stock. Additionally, Indus should benefit from VI’s planned 4G expansion and 5G rollout, which will drive tower additions, tenancy ratio improvement, operating leverage, and free cash generation. We expect Indus to deliver approximately 10% earnings growth over the next three to five years.

HDFC Bank Limited (HDB) is one of India's largest and most recognized private sector banks, offering a broad range of financial services to retail and commercial clients. It merged with parent company HDFC Ltd. in July 2023.
We see HDFC Bank as the best quality play in Indian financials, given its history of consistent returns and best-in-class management. The bank has a solid deposit franchise and healthy asset quality, which gives it a competitive advantage in funding. HDFC Bank’s significant investments in technology place it as a leader in digital banking, which should drive continued market share expansion and efficiency improvements.

ICICI Bank Limited (ICICIBC.IN) is India’s second largest private sector bank, with a strong capital base and attractive liability franchise. The bank is focused on the retail segment, which is under-penetrated and provides a long runway for growth.
ICICI Bank’s profitability is improving due to favorable trends in asset quality, margins, and costs. We are encouraged by management's focus to improve the customer journey, partner with other fintechs via an open architecture, use data analytics to better tailor product offerings, and modernize its mobile banking app into a superapp that serves various customer needs. We believe these initiatives will allow ICICI to gain share, improve efficiency, and narrow the valuation gap versus other high-quality, private-sector banks in India.

Tata Consultancy Services Limited (TCS.IN) is the largest IT services company in India. It provides consulting services and software products to help its clients with innovation and technology transformation.
Tata Consultancy should benefit from a multi-year global enterprise cloud migration. We believe it will capture share from smaller players as customers consolidate their IT services vendor base. Backed by the Tata Group, Tata Consultancy enjoys best-in-class corporate governance and a strong leadership bench. Its high employee retention helps drive its industry-leading profitability and return profile. We estimate low double-digit EPS growth over the next three to five years, with more than 80% of profits returned to shareholders.

Zomato Limited (ZOMATO.IN) is India's leading food delivery platform, with roughly 50% market share. The company also has a classified advertising business. 
Zomato is well positioned to benefit from structural growth in online food delivery in India. The industry has become a duopoly between Swiggy and Zomato, which bodes well for future profitability and scale. In our view, the company should generate revenue growth of more than 40% over the next three to five years.

JM Financial Limited (JM.IN) is a diversified non-banking financial company based in Mumbai, India. It offers trading/brokerage services, real estate financing, corporate lending, asset reconstruction, and wealth management products.
We think JM is well positioned to benefit from growing corporate/retail credit demand in India, especially as large public sector banks struggling with bad loans are unable to service their customer base. As India's second largest asset reconstruction company, JM will also benefit from the accelerated resolution of non-performing loans in the banking industry, in our view. We remain confident that book value can grow by 12% to 15% over the next three to five years.

Leading Indian electronics manufacturing services player Kaynes Technology India Limited (KAYNES.IN) specializes in low-volume, high-value sub-spaces. It offers OEM and ODM services to auto, industrial, medical, railway, aerospace and defense, IoT, information technology, and consumer end markets.
We believe Kaynes is well positioned to benefit significantly from the Indian government's push for import substitution. We are also excited about Kaynes’ recent entry into outsourced semiconductor assembly and testing (OSAT) and smart electricity meter. We expect the company to achieve 40%-plus revenue and EBITDA CAGR in the next three to five years.

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