Dan Tannenbaum of India Capital discusses finding value in the Indian power ecosystem despite high index valuations.
Assertion Supported
Tannenbaum: Indian private markets returned 35 cents per dollar since 2000
“Of every dollar invested since 2000, something like 35 cents has come back, and I'm sure the industry will come good, but as I was sort of looking over the proverbial wall at other asset classes, it's not exactly apples to apples comparison, but for example, i…”
Assertion Supported
Tannenbaum: Net Foreign Allocator Flows to India Are Functionally Zero
“Net flows from foreign allocators are functionally zero to India.”
Assertion Partly supported
Tannenbaum: 80% of new power generating capacity in India is renewable
“In reality, 80% of new generating capacity in India is renewable.”
Insight
Tannenbaum: Conglomerates are suboptimal everywhere in the world except in India
“So much so that there's a Harvard Business School professor I worked with named Tarun Khanna, who'd done this seminal research where he said, conglomerates are the worst form of business unit and organization and suboptimal everywhere in the world, except Indi…”
Assertion Supported
Tannenbaum: India's stock index matched 8x GDP growth since 1999, beating China
“China's GDP growth has been 16 X versus eight X for India, but China's index performance on that 16 X GDP growth has been two and a half X, and India's index performance on that eight X GDP growth has also been eight X.”
Assertion Supported
Tannenbaum: 75% to 80% of Indian Large-Cap Returns Are EPS-Driven
“The other is that valuations must be expensive, and because India has had a relatively decent run, that too feels like it should be the case, but when you decompose it, yes, returns have been okay, but because earnings growth has been pretty strong for the lar…”