Ashoka India beats benchmark as Indian economy proves resilience

Ashoka India Equity Investment Trust PLC on Wednesday outperformed its benchmark despite a fall in net asset value as it posted its annual results.

The India-focused closed-ended investment company said net asset value per ordinary share at June 30 was 261.9 pence, down 6.1% from 278.9 pence a year earlier.

AV total return for the year was negative 5.9%, compared with negative 0.2% a year earlier, but outperformed its benchmark, the MSCI India IMI Index, which returned negative 8.5%.

The company noted that "strong stock selection, especially in mid and small caps, has been a significant contributing factor" to its outperformance of the benchmark.

Ashoka India said pretax loss for the 12 months ended June 30 was £26.2 million, swinging from a £11.0 million profit the previous year, primarily reflecting a swing to investment losses of £20.8 million from a £27.2 million gain a year earlier.

Ashoka India named OneSource Specialty Pharma Ltd, which delivered a portfolio return of minus 29.6% at a weight of 2.6%; Info Edge India Ltd, with a portfolio return of minus 38.1% at a weight of 0.8%; and Bharti Airtel Ltd, with a portfolio return of minus 13.1% at a weight of 4.4%, as key detractors.

Ashoka India named TD Power Systems Ltd, which delivered a portfolio return of 132.5% at a weight of 0.6%; Acutaas Chemicals Ltd, with a portfolio return of 188.5% at a weight of 0.7%; and Aditya Infotech Ltd, with a portfolio return of 129.4% at a weight of 0.5%, as key contributors.

Ashoka India declared an interim dividend of 0.6 pence per share, but said it did not expect to pay a significant annual dividend.

Ashoka India said India's macro environment was tested by a series of "external and domestic shocks", including tariffs, AI, the Middle East conflict and El Nino. However, high-frequency indicators pointed to a resilient domestic demand environment, with real GDP growth of 7.8% in the first quarter of financial 2027, "comfortably ahead" of market expectations.

Looking ahead, the company said it believes "India is on the cusp of realising its true economic potential while benefitting from several secular tailwinds, the most important being its favourable demographics and rising income levels, which will allow domestic consumption to flourish, with the demand for discretionary goods, travel and leisure, financial and healthcare services on the rise.

"The country is also experiencing a rapid digitalisation of services, supported by increasing internet penetration and formalisation on the back of ongoing structural reform.

"The company also said India offers an attractive opportunity for alpha generation as its equity market remains relatively under-researched, with opportunities across large-, mid- and small-cap stocks.

"All these factors place India as one of the most promising economies over the medium term and make for a highly compelling investment proposition," the company concluded.

Shares in Ashoka India were marginally down at 245.44 pence per share on Wednesday morning in London.

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