India 101: It’s Real, Pinch It

Quantum Advisors India

Building your India portfolio since 1990 on a foundation of ethics, integrity & disciplined investment research process.

Oct 1, 2020

A rising stock market makes good headlines – and allows the rubbish to get swept under the carpet. In fact, it allows more rubbish to be created only to be hidden again.


So many of the well-travelled and well-quoted captains of industry gamed the willing-to-be-greased system. They played to the full-house gallery of “India is a super power” fans. In doing so, India’s legendary list of suspects built up their personal - mostly questionable - wealth. The freckled, bespectacled schoolgirl with braces turned out to be the head of an over ground, legitimate enterprise that would make the Colombian drug lords weep with shame.

Within this Love Boat mentality, the more rational views were submerged. India, we argued:

1) Would not sustain long term growth rates of 8% plus, a 6.5% to 7% long term rate was more rational;

2) While there was an infrastructure story, there was also a distortion of costing; national assets (coal, gas, iron ore, real estate, spectrum) were being given away at throw away prices to a favoured few and would not stand the test of changed government regimes – or of court challenges;

3) While Goldman was pushing its “demographic dividend” xl sheet, we argued that there was no job creation to actualise that flawed expectation; in fact, that may be a liability and – in our view – the real risk to the “India story”;

4) While there is the case for a surge in consumption due to rising rural and urban incomes, the naïve Indian businessmen – fuelled by cheap and plentiful credit – were over reaching themselves with mall construction or even IT office space;

5) Despite all the heroics at Davos, the reality is that India was a work-in-progress economy for the next 20 years; the reality of feeding 200 million poor and helping them climb up the economic ladder would result in fiscal deficits, higher inflation, and a weak currency; India, we argued, was not a typical Asian exporter with a strong currency;

6) The Fed and US interest rates were the other big risk to India; a failure of successive governments to harness the USD 500 billion of domestic savings into India’s capital markets made India excessively reliant on Uncle Ben and his periodic habit of sneezing.

The Real Opportunity

Underpinning all this “worry” and “opportunity” is something real: the movement of hundreds of millions from lower levels of consumption to a higher level of consumption. Unlike the meticulously planned China model or the well-lobbied US model, this movement in India was chaotic and random. A combination of Schumpeter’s creative destruction and the randomness of Brownian movement, spiced with Russian-style (or Wall Street style) crony capitalism. Within this chaos, we had to find high integrity managements who would be able to build solid businesses – and buy these liquid stocks at attractive valuations.

Related Post

  • May 01, 2020
Our History

Quantum Advisors was founded by Ajit Dayal as India’s first institutional equity research house in January 1990.

Our Strategies

Explore how our two main strategies – Predictable India Equity and India Integrity Equity - with demonstrated success of our tried and tested research and investment processes can ensure your India equity allocation will have higher predictable outcomes and no surprises.

Q India Value Equity Strategy

20+ years of India Long-only, Liquid, High-Governance, Margin of safety = Predictability

Integrity screen since 1996, strategy Track record since 2000.

Q India Responsible Returns Strategy

Liquid, proprietary Integrity Scores, Financial Soundness

Integrity Screen since 1996, enhanced criterion since 2015, strategy Track Record since 2019; strategy AuM: $9.7 mn Mandate Capacity: $5 billion

Quantum Advisors pioneered a quantitative as well as qualitative analytical approach to equity investing in India, providing for the first time, consistently applied valuation metrics to evaluate investment opportunities in India’s emerging stock markets. Over the years, Quantum Advisors has continued and enhanced its tradition of extensive financial analysis and value investing, as it has evolved into an investment advisor and asset manager.

Our investment philosophy and strategy involves the use of intensive qualitative and quantitative fundamental analysis. We build and monitor our clients’ portfolios actively while at the same time avoiding excessive trading, and control risk by endeavoring to keep our clients’ portfolio adequately diversified, both in terms of the sectors included in those portfolios, as well as with respect to the level of concentration in any specific security.

Building your India portfolio since 1990 on a foundation of ethics, integrity & disciplined investment research process.
Important Disclosure: Quantum Advisors provides a direct onboarding option to clients who wish to avail our services, without intermediation of persons engaged in distribution services.
© 2024 Quantum Advisors
Quantum Advisors Private Limited

CIN: U65990MH1990PTC055279
SEBI PMS Reg. No.: INP000000187

Registered Office

1st Floor, Apeejay House,
3 Dinshaw Vachha Road, Backbay Reclamation,
Churchgate, Mumbai 400020, India
Tel: +91-22-6144 7900 / 22830322
Fax : 91-22-2285 4318
Email: [email protected]

In case of any grievance/complaint, you may contact Mr. Piyush Thakkar, Chief Executive Officer at [email protected]. Investor can initiate dispute resolution by harnessing online conciliation and/or online arbitration through Online Dispute Resolution (ODR) portal SMARTODR. To know more about grievance redressal mechanism click here.
Learn more about our strategies, insights and investment process
Our affiliates:
Q India (UK) Limited

14th Floor, 33 Cavendish Square, London W1G 0PW (U.K.)

Sam Tully

Head - Business Development, UK
Contact: +44 7818 408526

Roger Mortimer

Head - Business Development, EU
Contact: +44 7947 242769

Q India Corp.

New York (U.S.A.)

Kevin Heller

Head - Business Development, US
Contact: +1 516 480-3679