“Auto ancillary companies moving into aerospace and defence are an interesting area. They are beginning to secure meaningful order books, and the opportunity is enormous,” he said.
Kothari believes the aerospace opportunity is still in its early stages and could create substantial value for Indian manufacturers if they succeed in becoming part of global supply chains.”Even if Indian suppliers capture just 2-3% of the requirements of Boeing and Airbus, revenues could potentially double or triple,” he said.
The aerospace industry offers characteristics that investors typically seek in quality businesses, including high margins, long-term customer relationships and strong returns on capital.
“Aerospace is a high-margin, sticky, high-return-on-capital business,” Kothari noted.
He added that policy support is also working in India’s favour, with the government encouraging global aerospace companies to increase sourcing from the country as part of broader manufacturing and export ambitions.Beyond aerospace, Kothari remains constructive on consumer discretionary businesses, where he continues to see attractive opportunities supported by rising incomes and evolving consumption patterns.
He is also positive on the travel and tourism sector, saying demand trends remain healthy and industry leaders are well placed to benefit as concerns around crude oil prices ease.
“We continue to like the theme and continue to hold related investments,” he said, referring to travel and tourism.
Kothari also highlighted textiles as a sector worth monitoring over the medium term. Trade agreements with the United Kingdom and potentially the European Union could improve export prospects for Indian manufacturers, although he cautioned that the benefits would take time to materialise.
“The opportunity is substantial, but it will take time. These benefits will not materialise in the first year,” he said.
While acknowledging that some stocks may have already priced in part of the opportunity, Kothari said investors should remain selective and focus on companies with strong execution capabilities and sustainable competitive advantages.
For long-term investors, he believes emerging manufacturing themes linked to global supply chains, particularly aerospace, could offer some of the most attractive growth opportunities over the coming years.
Watch the full conversation here
