Story of the year

Initiated by: Tamohara Investment Managers

Dear Investor,

For those who may be reading my year-end letter for the first time, I have a tradition of reflecting, and picking a story from the year gone by.

As I state every time, most of the “news” is not structural and not indicative of a seismic shift, but merely following a cycle. On March 31st 2019, I wrote:

“Narratives and stories drive investment outcomes in the short run. For the most part, they provide us with shock therapies with complete elasticity. The effect of the story is felt temporarily and over a period of time we are back to business as usual. Yet there are few stories that alter the course of business and cause a structural shift. As an investor with the intent of long term wealth creation, we need to ignore the stories with elasticity as noise and focus only on those few that create a change bringing about a new or an enlarged addressable opportunity. “

From the indigenisation of pharma and chemical supply chains in 2019 to energy sovereignty in 2023 and claiming a renaissance of European manufacturing that would no longer wish to rely on America in 2025, this exercise has ended up sparking a lot of ideas for us. Going through the news cycle for the past year should be no different.

What happened in FY26?

Headlines in FY26 were far too temperamental, spoiling the quality of sleep for us all. One man, more than anyone else, dominated the news throughout- President Trump. While they weren’t narrow in variety like the last year’s, they certainly were narrow in the source from where they came from.

Wars

With the withdrawal of American troops from Afghanistan by the previous President, one would have assumed that we would be insulated from an American Presidency inflicting a major global conflict upon us for a while. It was too short a time. It would be amiss to speak of the story of the year and not start with the Iran-Israel-US conflict we find ourselves in today. On one side we have Israel and the US, who seem to be playing to their previously practiced playbook of hit first and hit hard. The other side, Iran, however seems to be referring to a playbook we haven’t seen in the 21st century. Attacking fellow Muslim nations in the region during the holy month of Ramdan, fighting with a spirit of that wounded lion who has nothing to lose. Their guerilla tactics coupled with a surprising dose of ‘kar le jo karna hai’ (do what you may please) in their approach to attacking neighboring states is akin to multiple hardworking ants at play with a hammer (USA) trying to chase them all. The hammer may or may not get the ant before it scurries, but it certainly damages the floor badly in doing so.

The closure of the Strait of Hormuz speaks again to every nation’s need to build supply chain sovereignty or at least antifragility as much as possible. To the rest of the world, the war has simply underlined what was learnt in the aftermath of the pandemic, energy sovereignty and domestication of all critical supply chains. Be it our calibration of energy sources since (see chart below) or incentivising higher indigenous content either via PLI, BIS norms or simply mandating it so, India has clearly already adopted this lesson. The shifts caused by this war are therefore furthering an existing trend.

Source: Zerodha

Our tryst with conflict wasn’t limited to international conflicts alone this year. Operation Sindoor in response to the cowardly terrorist attack in Pahalgam in April redrew the contours of war between India and Pakistan. Use of Air force, which would have been once considered escalatory has now been normalised as a result of this operation. The advent of a new era of weapons systems- drones paired with multiple long range missiles capable of precision targeting is the norm. While Sindoor highlighted to the world the military asymmetry between India and Pakistan, for Indian businesses it highlighted the robustness of our defenses, and the shift in attitude of the current regime.

Tariff tantrums

When President Trump was not busy orchestrating global politics, he single handedly raised over $150bn (and counting) in tariff revenues for the USA. The uncertainty this brought upon exporters was severe. A container at sea could face significantly different economics for the customer who may choose to simply not accept the shipment at that point. Exports stalled as a result. Once a deal was reached, businesses took the new cost structure in their stride. A numerical shift, but not a structural shift barring the localisation of supply chains we have seen previously.

The disregard of the mighty

The eccentricities of President Trump (and many others) showed up in the expanded release of Epstein files. How quickly the news cycle moved on from it, how quickly everyone was able to go back to their lives with minimal damage or consequences shows the power of the mighty.

This blatant disregard for rules by the mighty traveled home when the largest airline operator in the country brought our flights to standstill. In failure to adhere to the new DGCA norms for flight crew time (notifications for which were given over a year prior to implementation). 4500 flights were cancelled in a span of 10 days. A 22.2 crore fine solved it all.

This has however been the way of the world. The world bends to the mighty.

Return of Bollywood and Renaissance of Virat Kohli

And to the mighty Dhurandhar, the world finally gave in. The fervor to watch the 4hour+ second installment of the movie was difficult to miss in any part of the country, in any part of life- office, walks in children parks (by parents ofcourse), house parties. Everyone wondered who is bade sahaab, and both Dhurandhar 1 and 2 and brought people back into cinema halls in throes. Perhaps our love affair with movies is reignited.

Perhaps our love affair with Virat Kohli needed the poetic 2025 he has had. Retirement from the test format that no one saw coming and a RCB victory in IPL that everyone has hoped for at some point.

Our love for Bollywood and cricket has never been one to shift. Though it seems to have compounded brilliantly in the culmination of the sale of RCB for $1.78bn to the Aditya Birla Group.

Structural agents of change

The above headlines, while significant, aren't the harbingers of change that we look for. While the power of the Indian agent was unleashed in our imagination with Dhurandhar, the agent that is one for a structural change, is Claude. Agentic AI has leveled the playing field. Access to capital and tech/ best processes was limited to the ones at the top. Depth in private and venture markets had already been solved for the former. Agentic AI solved the latter. For this reason alone we pick it to be our story of the year!

In our industry itself, data updation in models collating notes from years on a business and creating a summarized research document on the company, being alerted on when an idea could potentially fit into your framework, scheduling meetings effectively, providing notes prior to those meetings (making them far more productive), etc. are some of the capabilities the “agent” has brought in. It has therefore resulted in a shift in the education qualifications required (none). Critical thinking takes precedence vs. having someone follow instructions. Perhaps so does liberal arts over professional degrees.

For smaller enterprises, the agent frees up bandwidth of executive assistants to see if they would morph into a founder’s office role. Technology is not intimidating and is democratized.

The conversation shifts to growth from what are the limits and challenges to growth. Perhaps the era of proliferation of professional and quality SMEs is here upon us. This is the structural shift we are calling out for this FY.

As always, we thank you for putting your faith in us. Wish you a very happy and prosperous FY27!

Best,
Harini Dedhia