Leading businesses are taking advantage of India's attractive growth prospects

Liontrust India fund manager Ewan Thompson identifies three businesses that he believes have a strong chance of producing profitable returns

When it comes to emerging markets, and possibly all global markets, India is frequently regarded as the most alluring long-term investment opportunity. India offers enormous growth potential due to its strong institutions, dynamic democracy, market-friendly policies, entrepreneurial business culture, and compelling demographic story. This is what we aim to achieve by investing in "emerging leaders"businesses that are ideally positioned to prosper in a world of swift change and disruption, which is particularly noticeable in emerging markets.

These new leaders are companies that have the assets, skills, and market positioning to produce enormous profits in the face of swift industry change. They may be change-adapting dominant industry leaders or challengers upending their respective sectors. They work in lucrative sectors with significant competitive advantages, but more importantly, they have the foresight and capital to make investments for expansion. While adopting new technologies allows them to gain digital leadership, these companies will be able to defend their position thanks to their distinctive assets, technological leadership, and the challenges customers face when trying to move to other suppliers.

Indian businesses are advancing.

With a 50 percent market share and established alliances with the top six companies in the sector, ASK Automotive (Mumbai: ASKAUTOLTD) is the top manufacturer of two-wheeler braking systems in India. Following a downturn, the two-wheeler market is expected to grow by 10% to 15% annually for the remainder of the decade. Historically, by growing its market share and diversifying its product line, ASK has outpaced industry growth.

Because braking systems are so important, the industry has high entry barriers and demands specialized materials and cutting-edge technology. Additionally, ASK's growth potential is increased by its favorable position for electric vehicles (EVs), which demand more aluminum. It is anticipated that as new capacity ramps up, strong margins and economies of scale will increase returns on capital from 20% to 25%.

Zomato (Mumbai: ZOMATO) is the top food delivery service in India and has benefited greatly from growing urbanization, disposable incomes, and digital adoption. By purchasing Blinkit, it has invested in "quick commerce"the quick delivery of necessities and groceriesto take advantage of a thriving market. Small vendors control the £600 billion food and grocery market in India, which presents Zomato with enormous opportunities. With new stores breaking even in two to three months, the company is expanding quickly into smaller cities. Growth prospects are compelling because the potential market is growing even as competition increases.

One of the best private hospital networks in India is Max Healthcare (Mumbai: MAXHEALTH). India has less than 80,000 private hospital beds despite having 1.4 billion people, which increases the need for high-quality healthcare. Max plans to grow from 6,000 to 8,500 beds in four years through strategic acquisitions and hospital expansions. With the highest revenue per bed in the industry, it dominates affluent areas like Delhi and Mumbai. Prioritizing specialized treatments (oncology, cardiology, and neurology), Max generates a return on capital of over 30%, with potential for growth as the demand for high-end healthcare increases.