What Mark Mobius Is Looking For In Indian Companies
Investment guru Mark Mobius likes to stick with companies that focus on getting a better return on capital, now perhaps more than ever.
“In talking to the management of some companies, I’m so impressed by their frugality. They are so cautious on spending, they have a very cautious view of where to put their capital,” the co-founder of Mobius Capital Partners told BloombergQuint. “They're looking at and focusing on return to capital and that’s a very healthy sign.”
If a company has healthy returns on capital, it means they'll have enough money to reinvest and to pay dividends, he pointed out. “Of course we're interested in dividends, not for the sake of dividends, but to show that the company is capable of paying back shareholders,” he said. It also helps when the company can grow with the capital they have instead of borrowing externally, he said.
The company’s two funds that are present in India have raised $150 million—a number that’s growing. Mobius said he plans to invest a significant part of that amount back in India.
Emerging markets will increasingly become a favoured destination for global equity investors in 2019 as the U.S. equity market enters a bear cycle, Mobius said. Within the emerging market basket, India looks particularly attractive, he said.
In India’s equity market, non-banking financial companies which have a banking license or are in the process of getting one, will do well, Mobius said. Consumption-related companies which have a big position in consumer products at a manufacturing or wholesale level, and are just starting to establish a brand, also look exciting, he said.
He's also interested in some mid-sized IT companies which have a lot of experience serving global computer software giants. “Many of these companies are starting to go to clients themselves instead of serving a larger IT company like IBM, and that’s exciting.”