Guy Le Page

RM Corporate Finance

It happened. Uranium managed to breach US$100/lb mid-January and was hovering around US$106/lb by the middle of last week.

There’s a lot going on for yellowcake fans right now. China is building 22 of the planned 58 global reactors. Japan is restarting reactors and Finland wants to build Europe’s first new reactor in over a decade.

Utilities signed contracts for 160 million pounds of U3O8 in 2023, the most since 2012. Kazatomprom, the world’s largest uranium miner, said it was likely to fall short of its production targets over the next two years.

And last week, in a soft market for IPOs, uranium and lithium explorer Infini Resources (ASX:I88) listed at 20 cents and finished the week at 34 cents.

Missed the boat? Nah, there are plenty of minnows out there with potential to play a role in the “clean energy” transition.

Minnows such as Gladiator Resources (ASX:GLA, 2c, $14m MC), a Tanzanian uranium explorer Le Page flagged one to keep an eye on in November last year.

It’s starting to pull up some high-grade results similar in style to a deposit 50km to the north which boast a resource estimate of 124.6 Mlbs of U3O8.

Aircore drilling due in Q2 2024 could flag a potential 3km strike length “which remains open down dip”.

Le Page expects a fundraising call to come shortly but doesn’t ” believe this will be a problem”.

“At an enterprise value of around $16 million, and some recent share price volatility helped along by a surging uranium price, this is definitely one to keep an eye on.”

Zach Riaz

Investment manager and director, Banyantree Investment Group

Here’s something interesting from Riaz: “When China started to invite companies to take up the country’s manufacturing capabilities in 2006 that’s when its GDP per capita exceeded the US$2000 mark.”

“That’s when China started having internal consumption growth, middle, rural and obviously upper class growth and broad-based prosperity throughout the economy that led to where it is today.”

And as it happens, India has just hit that same US$2000 GDP per capita mark.

“India is where China was in 2006,” Riaz tells Stockhead.

Yes, it’s a tricky market for individual retail investors to access, with multiple stock exchanges.

Of these, the National Stock Exchange of India Limited (NSE) and the BSE (formerly Bombay Stock Exchange) are the most well-known. The NSE is India’s largest exchange; the BSE is its oldest.

“India is a very hard market to get to as an individual investor because you need licences and so on,” Riaz says.

However, he says it is starting to open up more with different platforms offering investing in the country including Banyantree’s client Laverne Investing, for which they provide research and investment services.

And there’s the odd India-adjacent ASX play, too, which we’ll go into as one of Riaz’s three India-focused stock picks.

The most prominent is Varun Beverages Limited (VBL: NSE/BSE) – one of the largest franchisee bottlers of PepsiCo beverages in the world.

“Varun Beverages is the type of company you should be looking at to play the Indian growth story with double digit topline growth, double digit earnings growth, high margins and EBITDA of 22%,” he says.

“They cover about 92% of the Indian market and the important point is they are looking to expand with their drivers for growth in 2024 and beyond expansion of distribution to rural India.”

Sure, Westernised soft drink is a no-brainer. What you might not know is “nearly 80% of the people who sell beverages in India are what they term unorganised guys who sell bottles on their back or with a donkey cart putting together a store on the corner”.

Varun is helping ensure refrigeration capacity in rural India is growing at 12% CAGR and building more organised shop and better shop fronts.

And you can pick some of its action up on the New York Stock Exchange.

And for ASX action, Riaz says fintech Findi (ASX:FND, $1.30, $63m MC) provides investors an “attractive exposure” to key growth trends in India including increasing demand for financial services, increasing wealth in the lower to middle Indian class, structural growth in digital payments and the ongoing strength in India’s cash economy.

Findi is now one of the largest non-bank ATM operators in the world’s most populous country, with a network of 20,500+ ATMs. More than 350 million Indians are still either unbanked or underbanked.

“FND’s management has structured the business in such a way to create a circular economy which gives FND exposure to both the current vibrant cash economy via ATMs and the structural growth in digital payments via FindiPay,” he says.

Riaz says the importance of this strategic master stroke means FND is well funded and delivers positive operating earnings (EBITDA).

The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.