Baron India Strategy

Divi’s Laboratories Ltd. (DIVI.IN) is a leading player in pharmaceutical contract manufacturing and production of Active Pharmaceutical Ingredients (APIs) for the generics industry. Divi’s focuses on complex value-add projects, earning high margins and returns on capital.
Divi's is a beneficiary of increased API outsourcing by global pharmaceutical companies. The company has a dominant position with >60% market share in key APIs such as Naproxen and Dextromethorphan, given its economies of scale and lower cost structure. We expect the company to generate 10% to 15% earnings growth for the next five years driven by continued robust demand.

Bajaj Finance Limited (BAF.IN) is a leading, non-banking financial company in India. It offers various financial products and services including housing loans, consumer durables financing, small- and medium-sized enterprise credit, and rural loans.  
We believe Bajaj is well positioned to benefit from growing demand for consumer financial services in India. The company’s data analytics platform is a key competitive advantage, enabling high risk-adjusted returns; in our view, return on equity can be sustained at 20%–22%. Bajaj is also building a broader digital ecosystem, with apps offering insurance, brokerage, wealth management, and other financial products. We expect Bajaj to compound earnings at roughly 25% annually over the next five years.

Precision Wires India Limited (PWI.IN) is the largest manufacturer of enameled copper winding wire in India, with approximately 30% market share. Winding wire is a critical component used in power transformers, generators, automotive motors, and industrial motors.
Precision Wires sells its products to original equipment manufacturers across a broad range of end markets, including automotive, aerospace and defense, power, electronics, home appliances, and infrastructure. The company benefits from long-standing customer relationships, scale advantages, and in-house R&D capabilities, which underpin its competitive positioning. Over the long term, we believe structural growth in India’s power sector and rising penetration of electric and hybrid vehicles should drive continued demand for Precision Wires’ products.

Eternal Limited (ETERNAL.IN) owns India’s leading food delivery platform, Zomato, and quick commerce platform, Blinkit. Zomato holds an estimated 55% of food delivery, while Blinkit accounts for approximately 40% of quick commerce. 
Eternal is well positioned to benefit from structural growth in online food delivery in India. The industry has become a duopoly between Swiggy and Eternal, which bodes well for future economics and scale. Eternal is also leading competition in the fast-growing quick commerce industry in India. We believe the company has the potential to double revenue while also improving profitability and growing earnings over the next three to five years. 

InterGlobe Aviation Limited (INDIGO.IN), known as IndiGo, is India’s largest airline, with about 65% of the domestic market. It operates a low-cost network of more than 440 aircraft serving over 140 destinations in India and internationally.
IndiGo has benefited from industry consolidation, while its scale and cost position help it navigate supply-chain constraints better than smaller competitors. We remain optimistic about rising air travel demand in India, potential for improved pricing discipline, and the company’s long-term international expansion. Its low-cost model and extensive network should support share gains and operating leverage. We expect EBITDAR to compound by 15% to 20% annually over the next three to five years.

Bharat Electronics Limited (BHE.IN), or BEL, is a leading Indian defense electronics manufacturer with an estimated 60% domestic market share. It is the second-largest defense public-sector undertaking by revenue and develops communications, radar, electronic warfare, and tank systems.
BEL’s sustained investment in in-house R&D and cost discipline support a strong profitability profile. We believe the company is well positioned to benefit from India’s defense indigenization initiatives and rising defense spending. Expanding exports and non-defense businesses provide additional growth opportunities. We expect BEL to compound earnings by 15% to 20% annually over the next three to five years.

ICICI Bank Limited (ICICIBC.IN) is one of India’s largest private-sector banks, providing retail, business and corporate banking, treasury and digital financial services to individuals and businesses in India and select international markets.
ICICI Bank’s profitability is improving, supported by favorable trends in asset quality, margins and costs. Management’s focus on improving the customer experience, expanding fintech partnerships, using data analytics to tailor products and developing its mobile app into a broader digital platform should support market share gains and greater efficiency. We believe these initiatives could help narrow the valuation gap with other high-quality Indian private-sector banks.

HDFC Bank Limited (HDFCB.IN) is one of India’s largest private sector banks, offering retail, wholesale and commercial banking services. Housing Development Finance Corporation Limited merged into the bank effective July 1, 2023.
We view HDFC Bank as a high-quality investment in Indian financials, supported by its record of consistent returns and strong management. Its leading deposit franchise and healthy asset quality provide a funding advantage, while continued investment in technology strengthens its digital banking capabilities. These advantages should support further market share gains and improved efficiency.

Kirloskar Oil Engines Limited (KIRLOSENG.IN) is a leading Indian manufacturer of engines, generator sets, and agricultural equipment. It holds an estimated 30% share of the small- and medium-horsepower genset market and serves power generation, industrial, and agricultural customers.
We believe Kirloskar is well positioned to benefit from rising demand for backup power in India, supported by higher government and private-sector investment in infrastructure and manufacturing. Continued share gains in high-horsepower products should improve mix and margins. We expect the company to compound revenue by 15% to 20% and earnings by more than 20% annually over the next three to five years.

Cholamandalam Investment and Finance Company Limited (CIFC.IN), known as Chola, is a leading non-banking financial company in India, with well-diversified businesses spanning vehicle loans, loans against property, and home loans. Chola runs a loan book of $14 billion, with 1,204 branches across 29 states.
We believe Chola is well positioned to benefit from growing demand for consumer financial services in India, and we are excited about several opportunities that lie ahead for the company, including the launch of its new unsecured consumer and small-to-medium enterprise loans, as well as the continued rollout of its home loans. We expect Chola to sustain loan growth of 20% to 25% and double its loan book in the next three to five years.