CHERRY PICKING
OF COMPANIES

We broadly invest in companies which meet the following parameters:

– Business models that we can understand reasonably well
– Inherent & visible growth – we generally look for businesses which are poised for 20% year-on-year growth over the next few years
– Strong or improving balance sheet

Backing strong management teams

A clean & focused management is equally important as much as a good business. We spend considerable time in understanding management’s vision and priorities, and back teams with passion for scaling up businesses.

REASONABLE
VALUATIONS

We are extremely conscious of the “value” that we pay to “buy” a business – investing in right business at the right value is half the battle won in quest for wealth creation.

LONG TERM
HOLDINGS 

We stay invested as long as the growth is visible, valuation stays reasonable and there are no other structural issues with the investment.

APPROACH

It’s important to focus on returns, but it’s more important to protect the capital first. We are more biased towards downside risk protection even at the cost of giving up riskier quick returns.

Some of the parameters that we are gripped with and maintain a continuous check on, include:

Valuation/ Market Risk
We tend to keep a close watch on parameters like price to earnings growth to define what price we are paying for the kind of projected growth. This, with an additional layer of comparative 7-10 years, historical valuations help us to build in downside risk in a bear market.
Management Risk
Consistent tracking of changes in management's shareholding structure / encumbrances as well as quality of financial reporting is vital for our investments. We also take cognizance of issues like environmental, technological and litigation risks.
Liquidity Risk
We follow a disciplined hard cap of not more than
10% allocation in a single company and not more than 25% in a single sector. From an exit management perspective, we also generally do not buy more than 1-5% of the companys market cap.

PROCESS

01

IDEA GENERATION

  • Proprietary idea generation
  • Running screeners on various parameters
  • Exchange of ideas with industry experts
  • Attending events, seminars & conferences.
02

SCREENING

  • Running screeners on various fundamental parameters
  • Bottom-up analysis, running through annual report & concall transcripts and background check on the management.
  • Filter down stocks that fit our investment philosophy
03

MANAGEMENT MEETINGS

  • Understanding the business model and industry prospects directly from the horse’s mouth
  • Insight into managements long-term vision
  • Validating our assumptions on the company’s growth
  • Plant visit
04

FOLLOW UP ANALYSIS

  • Building a financial model and project the overall growth in the business for the next two years
  • Peer comparisons
  • Valuation check
  • Select companies which fit our investment metric
05

PORTFOLIO CREATION

  • Create a concentrated portfolio of ~10-15 stocks.
  • Diversify across sectors
06

CONSISTENT MONITORING OF PORTFOLIO

  • Monitor  performance of the company
  • Monitor  changes across the overall industry
  • Track  developments in the company
  • Track whether management’s actions are in line with what was spoken