Yesterday, we talked about the huge demand for infrastructure in India and the opportunity this gives you to make triple-digit gains in the next 18 months.
As a result of chronic underinvestment in infrastructure and 290 million people moving into its urban areas by 2030, India will be spending $1.5 trillion over the next seven years to bring its infrastructure up to date.
That means windfall profits for companies that land a share of the $1.5 trillion prize.
A “backdoor” way to play this boom is by investing in one of India’s largest financial institutions.
290 million people moving to India’s cities by 2030 translates into a staggering number of new homes needed. And Indians will likely turn to HDFC Bank (HDB) for their home loans. The bank’s name, HDFC, is actually an abbreviation for Housing Development Finance Corporation.
In addition, the bank will profit alongside the infrastructure boom by providing financing for companies looking to buy the heavy equipment needed for construction projects. Just a week ago, HDFC held a “Mega Loan Mahotsava” (a big get-together to bring equipment makers, buyers, and bank lenders together).
From the HDFC Bank announcement:
“HDFC Bank organized a first-of-its-kind one-day Mega Loan Mahotsava… with focus on loans for construction, earth-moving equipment, and agriculture. The bank partnered with blue-chip equipment makers such as… L&T Komatsu… Caterpillar… L&T Case Equipment, Standard Cranes, and Hyundai Construction. On display at the Mahotsava were different models of Backhoe Loaders, Excavators, Cranes, and Tippers.”
The company also just bounced off its 200-day moving average, providing a decent buying opportunity.
HDFC Bank gives investors a unique way to profit from India’s infrastructure boom.
But there is a more traditional investment I have found that excites me even more.
I just told members of the Liberty Street League who follow my Trend Trader portfolio about it last month, and you will have to join the League to get the name.
But I can tell you about some of the powerhouse companies behind this investment:
- Tata Power — the largest integrated electric power utility in India. The company provides power generation and electronic equipment and project consulting services. Tata Power is adding new electric capacity all over the country.
- DLF Ltd. — India’s largest real estate company by revenues, earnings, and developable land. As India’s population expands (and gets wealthier), the demand for housing, commercial space, and retail shopping will skyrocket. DLF is perfectly positioned to profit from this demographic shift.
- Larsen and Toubro — India largest engineering firm. The company specializes in engineering and construction projects, focusing on power, electrical, and railway projects. All three are desperately needed as India expands.