Azentus Capital bets automaker Maruti to ride growth in India's economy
Hong Kong: Maruti Suzuki India Ltd is best placed to benefit from an improvement in India`s economy as it attracts first-time car buyers, Morgan Sze, founder and chief investment officer of hedge fund Azentus Capital Management, said on Thursday.
Sze, a former Goldman Sachs top trader and now one of the best known Asian hedge fund managers, said the Indian economy is stabilising and last month`s election results have helped improve chances of an acceleration in growth.
India auto industry is also "currently poised for a cyclical upturn", Sze told hedge fund managers at the Sohn/Karen Leung Foundation Conference Hong Kong. He did not say whether the fund was invested in Martui Suzuki.
Picking Maruti Suzuki as his best bet, the Hong Kong-based fund manager predicted a 28 percent annualised growth in the automaker`s earnings over the next three years. Maruti Suzuki dominates the market with a 42 percent share.
Sze said Maruti also benefits from India`s diesel price deregulation because a majority of its cars run on petrol-fuelled engines. He also said its valuations are attractive and the company is best placed to attract first time buyers.
Maruti trades at 20 times its forward 12 months earnings and its share price has risen about 40 percent so far this year, nearly double the returns in India`s benchmark Sensex index.
Of the 48 analysts covering Maruti, 37 rate it as a buy, according to data from Thomson Reuters StarMine.
Sze`s multi-strategy hedge fund mainly focuses on companies related to Asia. It gained about 16 percent last year but its assets fell to less than USD 1 billion, according to its March filing with the Securities and Exchange Commission, following a 6.8 percent loss in 2011 and just 1 percent gain in 2012. It earlier managed about USD 2 billion.
The conference, a charity partnership between the Karen Leung Foundation and the Sohn Conference Foundation, is a rare gathering of some top hedge fund managers in Asia.