In the last decade, we have seen consolidation in market share among the respective leaders, across most sectors in the country. The implication of the above being that between FY10-22, as an investor, you could have concentrated and benefitted from market share consolidation. Coming out of covid, corporate India had cleaned up its balance sheets, as a result of which, tier-2/3 companies, which are typically small cap and more levered – cleaned up their balance sheet and saw their ROEs expand since.

It is imperative to note two things that we see today – First, capacity addition is coming in even from smaller peers today, not just from industry leaders. Second, when you look at consumption growth, competition is picking up from a broader base of companies in the unlisted space, and the listed space is growing at a slower rate. As a result, caution against concentration and emphasize the importance of considering the entire market landscape before making investment decisions.