I hold a different perspective. In my view, a business’s growth should primarily depend on the available market and its growth potential, rather than the degree of diversification it possesses. Specifically, I strongly believe that the affordable housing loan market represents a substantial and continuously expanding opportunity.
The negatives you mentioned about the business not diversifying into other sectors do not concern me. I do not see it as a negative factor. I believe that instances where growth has tapered off in other businesses were primarily due to the limited size of the addressable market, rather than being a consequence of focusing on a single area of expertise.
For me, what truly matters is that a company excels in its core area and remains focused on a large market. I am confident that this approach will yield positive outcomes for investors. As an investor myself, I prefer to have holdings in specialized financial players, each focused on different businesses, as a means to achieve diversification. For instance, one of the players in my portfolio is Ugro Capital focused on another larger addressable market of MSME lending. This way, I aim to spread risk and capture opportunities across various sectors, rather than investing in a single company involved in multiple businesses.
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