Fairfax India (FFH.U)
At a recent price of about $18, Fairfax India trades at a 10% discount to book value of about $20 per share.
A few weeks ago, I initiated a starter position in Fairfax India Holdings, a company I've been watching for some time. What caught my eye was a glaring disconnect between the company's market price and the intrinsic value of its underlying assets.
Currently trading around 0.9x book value, Fairfax India offers a compelling opportunity to invest alongside proven capital allocators in one of the world's most promising growth markets.
For context, India recently overtook China as the world's most populous nation and is expected to remain the fastest-growing major economy over the next decade.
Between 2013 and 2022, India's middle class swelled by 107 million people – a figure projected to reach 386 million by 2030. Naturally, this demographic shift is creating massive opportunities across sectors like infrastructure, financial services, and consumer markets.
But investing directly in Indian equities can be tricky for foreign investors. Market access issues, corporate governance concerns, unfamiliar business practices, and regulatory complexities create meaningful barriers to entry.
This is where Fairfax India shines – offering a professionally managed vehicle to navigate India's dynamic but often opaque market.
The Fairfax Approach: Concentrated, High-Conviction Investing
Founded in 2014 by legendary investor Prem Watsa (often called "Canada's Warren Buffett"), Fairfax India was built for a singular purpose: to invest in high-quality Indian businesses with durable competitive advantages and exceptional management teams.
Unlike a typical emerging markets fund that spreads capital across dozens of positions, Fairfax India takes concentrated bets, often acquiring controlling stakes in a select group of companies. This approach allows them to actively drive operational improvements and influence capital allocation – in many ways resembling private equity, but with the liquidity and transparency of public markets. It also enables management to think long-term, a crucial advantage in a rapidly developing economy.
Despite a recent leadership transition with CEO Gopalakrishnan Soundarajan taking over from Chandran Ratnaswami, and Benjamin Watsa being appointed Vice Chairman alongside his father, Prem, the company's bedrock investment principles remain unchanged.
A Portfolio of Crown Jewels
To appreciate the value proposition of Fairfax India, let's peel back the layers of its core holdings:
Bangalore International Airport (BIAL)
The centerpiece of Fairfax India's portfolio is undoubtedly its 74% stake in BIAL, India's third-largest airport located in the heart of its technology hub, Bangalore (officially Bengaluru). After steadily building its position since 2017, Fairfax India took majority control in February 2025, acquiring an additional 10% from Siemens Project Ventures for $255 million.
With the opening of a second runway in late 2023 and the completion of Terminal 2 (designed to handle 25 million passengers annually), BIAL is primed for growth. Here's a snapshot of recent figures:
Passenger traffic grew nearly 10% to 40.7 million in 2024
Revenue jumped 46% to $441 million
Net profit rose 18% to $51 million
Return on equity hit 14%
But the most enticing aspect of BIAL? The nearly 4,500 acres it controls around the airport, offering immense opportunities for commercial real estate development.
Given the sky-high multiples major international airports command – typically 12-20x EV/EBITDA – BIAL alone could be worth substantially more than what Fairfax India paid for its entire position.
Sanmar Chemicals Group
Fairfax India owns roughly 43% of this leading specialty chemicals manufacturer. While less glamorous than tech, Sanmar is a direct beneficiary of India's infrastructure boom and the global diversification of supply chains away from China.
CSB Bank
A classic turnaround story. Since Fairfax's involvement, this once-troubled bank has dramatically strengthened its balance sheet, improved asset quality, and modernized its tech infrastructure. Recent results speak for themselves – 32% profit growth and 19% credit growth in FY2024.
Seven Islands Shipping
Fairfax India's 48.5% stake in this private shipping company plays directly into India's soaring energy demand. With EBITDA margins consistently north of 40% and strong free cash flow, it's a low-profile business with attractive fundamentals.
Other Investments
From engineering firms Maxop and Jaynix (supplying precision components to global OEMs) to its recent investment in Global Aluminum (an aluminum extrusion business capitalizing on soaring construction demand), Fairfax India continually positions its portfolio to capture the best of India's long-term growth.
Reading Beyond the Headlines
A quick glance at recent financials might give investors pause. In FY2024, Fairfax India reported a net loss of $41.2 million, compared to net earnings of $371.8 million in 2023. Book value per share slipped 4.1% to $20.96. Q1 2025 saw a further net loss of $211.2 million and a 7.4% decrease in book value per share to $19.41.
Ugly numbers, right? Not so fast. Dig deeper and you'll find these losses were largely driven by non-cash factors like foreign currency translation effects (as the U.S. dollar strengthened against the rupee) and mark-to-market adjustments in the public equity portfolio.
Operationally, the underlying businesses (particularly BIAL) continue to fire on all cylinders. It's this divergence between accounting optics and economic reality that creates compelling opportunities for investors who can see the forest for the trees.
Why the Opportunity Exists
So why does this valuation gap persist? A few thoughts:
Currency worries: Rupee depreciation against the dollar creates translation losses that spook investors, even if they're non-cash.
Holding company discount: Investment holding companies often trade below NAV due to concerns about tax leakage, lack of investor control, and limited catalysts.
Lack of liquidity and visibility: With a market cap around $1.7 billion and limited analyst coverage, Fairfax India simply isn't on most institutional radars.
Complexity: Combining public and private investments, currency effects, and mark-to-market accounting creates financial statements that require work to untangle.
My Take: Putting My Money Where My Mouth Is
Despite these challenges, I'm bullish on Fairfax India for several reasons:
High-quality assets: The portfolio offers direct exposure to India's most compelling structural growth drivers.
Exceptional management: The leadership team combines world-class investing acumen with deep local market expertise.
Alignment of interests: Fairfax Financial maintains a nearly 30% stake, with key executives holding substantial personal positions.
Multiple avenues for value enhancement: From operational improvement to eventual monetizations like an IPO of BIAL, I see a variety of catalysts for long-term value recognition.
Asymmetric risk-reward: Tangible asset value limits downside, while excess returns can be substantial if underlying holdings execute.
At a recent price of about $18, Fairfax India trades at a 10% discount to book value of about $20 per share. My take? There's plenty of room for the gap to narrow as book value itself grows over time.
I've begun building a position in the company and may add opportunistically if volatility persists.
For investors prepared to take the long view, Fairfax India represents a compelling vehicle to participate in India's multi-decade growth potential alongside world-class allocators, particularly at valuations that offer a reasonable margin of safety.