₹1 lakh crore RDI (Research, Development & Innovation) scheme was announced in December 2025 by the GOI to encourage private-sector R&D.
while most investors immediately started asking which companies could benefit..
I found myself thinking about a slightly different question:
What if the best way to identify future beneficiaries is to look for companies that were already investing in innovation before any incentives existed?
One metric that caught my attention was R&D spend as a percentage of revenue.
In public markets, investors spend enormous amounts of time analyzing revenue growth, margins, and earnings.
Yet some of the most valuable businesses are built through investments that depress earnings today in exchange for creating products and markets that may not contribute meaningfully for years.
In other words, the market often treats R&D as a cost. The best companies treat it as an investment.
One company that stood out to me was Aether Industries.
In FY26, Aether reported revenue of approximately ₹1,180 crore and spent ₹86.2 crore on R&D, translating to an R&D intensity of roughly 7.3% of revenue.
That is significantly higher than what most listed specialty chemical companies spend on research and development.
While most specialty chemical companies focus on scaling existing products, sustained R&D spending creates the possibility of entirely new product categories and end markets.
The distinction may seem subtle, but one approach expands capacity, while the other expands opportunity.
However, the number itself is not what makes the story interesting.
The real question is whether that spending is creating future economic value.
Over the last few years, Aether has been investing in multiple technology platforms that are now approaching commercialization.
Converge Polyols is expected to begin contributing from FY27.
Clarifier Chemicals, being developed in partnership with Milliken, are also expected to commercialize in FY27.
At the same time, the company is working on semiconductor-grade solvents, targeting an industry where India is actively trying to build domestic manufacturing capabilities.
Each of these projects should be viewed with a degree of skepticism.
Not every R&D initiative succeeds. Not every product becomes meaningful.
But that is precisely why I find the concept of optionality so powerful.
Viewed individually, these projects are uncertain. (kind of like an investment portfolio)
Viewed collectively, they represent multiple opportunities for value creation emerging from the same R&D engine.
An investor looking at Aether's financial statements a few years ago would have simply seen an expense reducing reported profits. Looking at the same expenditure today, one can begin to see a portfolio of potential future businesses.
This highlights something I find fascinating about investing.
The accounting treatment of R&D is often the exact opposite of its economic reality. The cost is recognized immediately. The value, if it emerges, may not become visible for years.
That delay creates opportunity.
Markets are generally efficient at valuing existing businesses. They are far less efficient at valuing businesses that are still being built inside the income statement.
This is why I find optionality such a powerful concept.
One successful R&D project can create an entirely new revenue stream. Two successful projects can alter a company's growth trajectory.
A portfolio of successful projects can fundamentally change the earnings power of a business over time.
Perhaps the most interesting aspect of India's ₹1 lakh crore RDI initiative is not the funding itself. It is that it may encourage investors to pay closer attention to a metric that has historically received far less attention than revenue growth or margins.
Because the companies that benefit the most from an innovation-driven economy may not be the ones that start spending on R&D tomorrow.
They may be the ones that have been quietly building capabilities, intellectual property, and future growth engines for years.
AND because the market rewards earnings and innovation first appears as an expense, that is why some of the most successful R&D-led businesses look expensive before they become obvious !