Motilal Oswal Digital India Fund: Investment in the future of the Digital Innovations

Digitalisation in India has transformed from a policy buzzword into a core growth engine of the economy, reshaping how citizens live, transact and work. Over the next decade, it is poised to become one of the biggest drivers of GDP, employment and productivity across sectors. Digital India is scaling up on multiple fronts, from payments and e-commerce to cloud, SaaS and digital entertainment, creating a broad universe of listed and emerging players. In this article we will review the Motilal Oswal Digital India Fund.

Why should you invest in the Digital India theme?

1. The digitalization revolution in India
   
   

   The digital space in India is estimated to grow 4X times from 0.3 trillion in 2024 to 1.2 trillion in 2030, while the Indian GDP is estimated to grow 1.7X. This gives an idea of how digitalisation in India is growing by leaps and bounds.

   
   

   

   Source: BoFA, MOIE Factset



2. Businesses are harnessing the power of internet In India
   
   

   

   Source: Temasek, Bain & Co. Statista, DataReportal, Deloitte, SEMrush, IBEF, Similar Web. Data as on CY 2024



3. India has reached its tipping point in the digital space
   
   

   

   Source: Deloitte, Capital IQ



4. Long runway for growth of tech in India
   
   

   

   Source: Whiteoak, MOIE



5. New Age India is tech oriented
   
   

   Our ecosystem is aligning towards diversified tech services. Digitalization has permeated every aspect of our lives right from booking a transport to work from an app to paying for it, buying grocery and other requirements online, banking remotely, ordering in food, attending meetings remotely, to having a friends' catch up online, or taking an online class and appearing for an exam. The immense scope of digital activity is sure to give a boost to the digital theme.

   
   

   

   Source: Nifty indices, MOAMC internal



6. Exponential growth may be expected across sectors
   
   

   

   Source: Google, Bain, Temasek



7. The IT sector of yesteryears can reflect the potential for digital space today
   
   

   Over the past 25 years IT services have made a substantial contribution to India's status as a strong business ecosystem. We may estimate that the digital enterprises will experience the same robust growth that the IT companies did in the early 2000s. The ongoing digital revolution taking place in India and the support of the country's digital pillars can accelerate this growth.

Motilal Oswal Digital India Fund

The Motilal Oswal Digital India Fund is a thematic equity scheme that aims for long-term capital growth by investing predominantly in companies linked to India's rapidly evolving digital ecosystem. The objective of the fund managers is to generate long-term capital appreciation by owning equity and equity-related instruments of digital and technology-related companies. The fund's mandate allows exposure not just to traditional IT services, but also to new-age consumer tech, digital payments, telecom data plays and content platforms, which can potentially capture this multi-decade growth. The AMC positions this fund alongside its broader "innovation" and "discretionary consumption" house themes, indicating a preference for high-growth, asset-light platforms and technology enablers.

Portfolio Strategy

• The scheme employs the application of Motilal Oswal's "high quality, high growth" (QGLP-style) stock selection, with emphasis on earnings growth and longevity even within the high-beta tech basket.


• High allocation to:
  
  
  • IT services and product companies
  
  
  • Communication services (telecom and data)
  
  
  • Internet platforms, media, entertainment and related digital businesses


• Flexibility to own ancillary beneficiaries such as fintech, platform-based businesses and tech-led consumer franchises.
  
  

  

  Source: MOAMC internal

Portfolio Construct:

The fund is small cap biased with 55% of investment in this market cap, followed by midcap investments of 34.3% and Large Cap investments of 9.1%. The top sectors and top holdings of the fund are given below.

Source: MOAMC internal

Who should consider the Motilal Oswal Digital India Fund?

The fund is a thematic one and as with all such funds, timing and allocation size are critical. Over-allocation can significantly skew an investor's overall risk profile. Therefore, investors should use this fund as a tactical or satellite allocation.

This fund is suitable for investors who:

• Want targeted exposure to India's digital transformation with a long-term horizon (at least 7–10 years).


• Are comfortable with high volatility, sector concentration risk


• Already have a diversified core equity allocation and are using this as a satellite, thematic investment.

Consult a mutual fund distributor or a financial planner to find out if the Motilal Oswal Digital India Fund is suitable for their investor profile.