India offers a compelling combination of domestic consumption, rising incomes and a young population, but how do investors identify the businesses best placed to benefit? Along with the FundCalibre team, Ajay Tyagi, manager of the UTI India Dynamic Equity fund, takes us behind the scenes of the fund’s quality-growth investment process.
This podcast based session explores how an 18-strong research team covers more than 450 companies and assesses everything from cash generation to management consistency.
The team discuss opportunities in smaller companies, healthcare and consumption, why great businesses can sometimes be worth waiting for, and how valuation discipline works in practice.
Finally, they challenge the idea that India is missing the AI revolution and explore its ability to adopt new technologies.
Why you should listen to the interview:
What separates a genuinely high-quality company from one that simply looks good on paper?
This interview takes listeners inside the research process, from analysing cash flows and questioning management teams to uncovering smaller companies before they become widely followed. It also explores India’s opportunities in healthcare, consumption and technology adoption.
This interview was recorded on 5 October 2026. Please note, answers are edited and condensed for clarity. To gain a fuller understanding and clearer context, please listen to the full interview.
Interview highlights:
What does ‘quality’ actually mean?
“Everybody feels that they have the best portfolio in terms of quality, but I would say you have to very objectively define quality. For us, the objective definition is: what’s the business delivering in terms of its capital efficiency, by which I mean metrics like return on capital employed or return on equity?
“Secondly, is the business able to fund its future growth using its own internally generated cash flows, or is it really dependent on external sources of funding, which could be either equity or debt or a combination of the two?
“That’s, again, a very sure sign of trying to see whether the business has really those inherent characteristics to have its destiny under control. Otherwise, if you are really dependent on external sources of funding, you will be, in a way, dependent and vulnerable to the economic environment around you. So I would say these are two very, very reassuring metrics for us.
“And you made a very good point earlier on. Nobody says that we have a portfolio of poor-quality companies, but the best way to measure that is to see the fund characteristics in terms of return on capital employed, in terms of debt-to-equity rate, in terms of margin profile and so on. If you compare different funds on these metrics, I would say it will become very evident about the quality characteristics that the fund is holding.”
Inside an 18-strong research team covering 450 companies
“UTI is the oldest asset manager in the country. We started our existence in 1964, so we’ve been around now for more than 60 years. Being the oldest also means that we’ve built a very, very strong research capability through all of these last six decades. We also have one of the most experienced research teams within India. We have an 18-strong member research team, and these research analysts would be covering a couple of sectors and about 30 to 40 companies each.
“Our overall research universe is more than 450 stocks. So you can imagine, for most people looking at India from outside of India, they would have 50, 70, 100 stocks under coverage. We have 450 stocks, 18 analysts, eight very, very experienced portfolio managers. So this is possibly, I would say in terms of team capabilities, as good as it can ever get.
“Now, in terms of how does this entirely function, I would say that the job given to our research analysts is to basically go deep into their sector, understand the nuances of the sector, and then help each portfolio manager in turn understand the entire sectoral landscape, as well as understand how different companies within each sector are really positioned.
“So I would say, while the portfolio managers have the absolute freedom to construct their own portfolios, they are being equally fed in by the research analysts in terms of understanding the landscape and therefore reducing the blind spots in the understanding of those portfolio managers.”
Why healthcare stands out
“What looks very interesting to us at this juncture is the healthcare sector. This is a sector where, with improving per capita income and disposable income, we are seeing and witnessing that households are spending more and more towards their healthcare expenditures.
“India is an out-of-pocket market. Unlike the UK and some of the other countries, we don’t have a very strong medical aid system, so there is no NHS equivalent in India. There are, of course, primary hospitals, but then most people, for their medical expenses, have to go to private hospitals and pay out of pocket.
“Now, there are two trends which have emerged in the last 10 years. One is that, with the increasing penetration of medical insurance, households have been enabled to spend more. And, of course, with rising per capita income, people are getting more and more conscious about their wellbeing. So both these trends put together put India into a very high growth trajectory in terms of the healthcare industry.”
Why valuation is the “easiest problem to solve”
“This happens to us very often. Quality and growth doesn’t come cheap, you’re absolutely right. In fact, quality and growth, if it happens together in any company, such companies typically would trade at very, very high valuation.
“Our job, and we keep reminding ourselves about this, is, first of all, to find great businesses which can compound economic value. And as that economic value compounds, it does get translated into an increase in market value of businesses. So the entire energy that we focus on is finding such kind of high-quality, high-growth businesses.
“Look, to our mind, valuation is the easiest problem to solve. I haven’t known of any company which, despite being a darling on stock markets, doesn’t go through disappointing quarters. And when I say disappointing quarters, such kind of high-growth companies can get corrected 20–30% in no time.
“If you’ve done the homework well, if you’ve found out a great company, you just wait for such instances where perhaps one bad quarterly print can lead to massive correction in stock prices, and you go all in at these stages.
“So I would say the more difficult part of our job is to find great businesses. The not-so-difficult part is valuations. If you have that discipline and if you’re really in for the long run, the markets give you, I would say, a lot of such kind of opportunities to solve for the valuation problem.”
India may not invent the technology – but it knows how to use it
“I would say the one thing which I’ve been hearing, not just of late but for the last couple of decades, is the fact that there’s a lot of concern and anxiety amongst global investors about India’s R&D spend, India’s technology spend, India missing the technology wave and so on.
“I heard that 20 years back when software was coming in. I heard that 10 years back when cloud computing was the in thing. I heard once again 10 years back when electric cars was one of those great opportunities. And of late, I’ve been hearing this because India doesn’t seem to be having any AI play, whether it’s in terms of the LLMs or it’s in terms of the infrastructure builders of today.
So I think a lot of global investors always think about India not catching on to the latest technology wave.
“But what I can tell you from my own experience, and of course meeting corporates, is that India is very good at adapting to the latest technology. Cloud computing came in, and I would say that most large corporates in India have started using cloud computing to improve their productivity.
“India was never there when the internet technologies were being evolved, but there have been so many successful businesses in the last 10 years which have been built around the internet technologies. And I would say the AI wave would be pretty much the same.
“So India is very good at adapting to new technology to eke out productivity gains out of such kind of technology waves. India may not be the innovator, but I think Indian companies by far do know how to take advantage of the latest technological innovations to actually improve their own productivity.”
Conclusion:
India’s appeal extends far beyond its headline economic growth.
With a vast domestic consumer base, rising disposable incomes and businesses increasingly adopting new technologies, the opportunity set continues to expand.
This episode shows why understanding individual companies remains just as important as believing in India’s long-term growth story.
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The writer’s views are their own at the date of publishing and do not constitute financial advice.
This information should not be relied upon by retail clients or investment professionals. Reference to any particular investment does not constitute a recommendation to buy or sell the investment.
Main image: india, martin-jernberg-nE2gf1scItI-unsplash
