Indian PM Aims to Double Economic Output: Should You Buy Fairfax India Holdings Corp.?

India is poised to become the fifth-largest economy in the world in 2018. Investors should be looking to Fairfax India Holdings Corp. (TSX:FIH.U).

| More on:

Indian prime minister Narendra Modi delivered the opening keynote address at the World Economic Forum in Davos, Switzerland, on January 23. This marked the first time an Indian prime minister has given this address. India has had a tumultuous year after demonetization and a regressive goods and services tax contracted small and medium business activity. In spite of this, Modi’s popularity has remained largely undimmed in India.

In October, the International Monetary Fund (IMF) lowered its growth projection for India in 2017 to 6.7% and to 7.4% in 2018. The IMF maintained this forecast and projected growth of 7.8% in 2019.

Modi set an ambitious goal of nearly doubling its economy by 2025 to $5 trillion. A 129-large person delegation accompanied Modi with CEOs and significant cabinet members from the country arriving to make their mark in Davos. This represented the fourth-largest delegation of any major country at Davos, only behind the United States, Britain, and the host country Switzerland.

The spokesman for the Indian External Affairs ministry, Vijay Gokhale, had laid out the tone of the visit in a press briefing. “…India is open for business and ready to do business in a big way. We want to tell the world to come and invest in India.”

Fairfax India Holdings Corp. (TSX:FIH.U) is a Toronto-based investment holding company that invests directly or indirectly in securities and debt instruments in India. The stock has climbed 19.6% in 2018 as of close on January 26. Since its listing on the Toronto Stock Exchange (TSX) Fairfax India Holdings has increased 83%. Considering the growth potential in India, the stock remains one of the more attractive long-term options on the TSX.

Fairfax India Holdings released its 2017 third-quarter results on November 2, 2017. The company announced a net loss of $53.2 million, or $0.36 per share, compared to net earnings of $66.4 million, or $0.62 per share, in the prior year. The company absorbed a net change in unrealized losses on investments after increasing its 10% equity interest in Bangalore International Airport. Fairfax India Holdings reported that its net change in unrealized losses was offset by the net change in unrealized gains in the investment of $76.6 million in the second quarter of 2017.

India is positioned to become the fifth-largest economy in the world this year. The Indian economy has not contracted since the turn of the century and has grown by one-third since Modi took office.

Of course, India will be wrestling key challenges in the future. Income and wealth inequality, a global issue that was a key talking point among many at Davos, has been exacerbated during this period of economic growth. The top 0.1% of earners in India have captured more growth than the bottom 50% combined since 1980.

As we look ahead to the next decade, India remains on a torrid pace that should compel investors to look closely at Fairfax India Holdings as a premier long-term hold.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any stocks mentioned.

More on Investing

Train cars pass over trestle bridge in the mountains
Dividend Stocks

Is CNR Stock a Buy, Sell, or Hold for 2025?

Can CNR stock continue its long-term outperformance into 2025 and beyond? Let's explore whether now is a good time to…

Read more »

engineer at wind farm
Energy Stocks

Invest $20,000 in This Dividend Stock for $100 in Monthly Passive Income

This dividend stock has it all – a strong outlook, monthly income, and even more to consider buying today.

Read more »

Hourglass and stock price chart
Stock Market

It’s Not Too Late: Invest in These TSX Growth Stocks Now

Solid fundamentals of these top TSX growth stocks could help them maintain strong upward momentum in the years to come.

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

These top dividend stocks both offer attractive yields and trade off their highs, making them two of the best to…

Read more »

stocks climbing green bull market
Stocks for Beginners

3 TSX Stocks Soaring Higher With No Signs of Slowing

Don't ignore stocks just because they look like they're at a high price. Instead, see exactly why they've driven so…

Read more »

dividends can compound over time
Bank Stocks

Is TD Bank Stock a Buy for Its 5.2% Dividend Yield?

TD Bank stock offers a rare 5.2% dividend yield—can it rebound from challenges and reward contrarian investors? Here's what to…

Read more »

chart reflected in eyeglass lenses
Investing

How Should a Beginner Invest in Stocks? Start With This Index Fund

This Vanguard index fund is the perfect way to start a Canadian investment portfolio.

Read more »

analyze data
Bank Stocks

Is BMO Stock a Buy for its 4.7% Dividend Yield?

Bank of Montreal is up 20% since late August. Are more gains on the way?

Read more »