Equitree Capital Advisors

Q3 FY26 Investor Webinar

Market Update & Outlook — Equitree Emerging Opportunities PMS

Thursday, 2 April 2026

Date

3:00 PM IST

Time

Today's Agenda

What We'll Cover

01

The Fund

AUM, strategy, track record & why we're different from traditional PMS

02

Performance

NAV since inception, period returns & alpha vs BSE 500 / Midcap 100

03

Markets, War & Ground Reality

Valuation landscape, India–Pakistan conflict impact & on-ground checks

04

Portfolio Deep-Dive

Holdings analysis, Shakti Pumps thesis & portfolio-level valuations

05

Why Now & Outlook

Risk-reward setup, capital deployment strategy & 3–5 year conviction

Fund Snapshot

AUM

₹1,100 Cr

As of March 2026

Client Families

500+

Active investors

Track Record

8 Years

Since April 2017

Portfolio Cos

~15

Concentrated positions

Median PE FY27E

11.3x

vs 16.4x 10yr LTA

Median PEG FY27E

0.53x

Growth at a discount

Median D/E

0.27x

Strong balance sheets

FY27E Earnings

+23%

Median PAT growth

Private equity-style approach with a concentrated portfolio of ~12–15 businesses.

We invest in high-quality micro & small-cap businesses with strong promoters, low leverage, and 20–25% earnings compounding potential over the medium term.

A True Private Equity Strategy

Median market cap comparison — why traditional benchmarks are not relevant

₹1,800 Cr

Equitree PMS Portfolio

(15 cos)

₹25,000 Cr

BSE 500

14× larger

₹17,000 Cr

Smallcap 100

9× larger

₹6,000 Cr

Microcap 250

3× larger

Even the closest index (Microcap 250) has a median market cap 3× our portfolio. No standard benchmark captures where we invest. That gap is the opportunity.

The ₹1,000–5,000 Cr segment remains under-researched and under-owned, creating strong upside as businesses scale and get discovered.

Fund NAV vs Benchmarks

Normalised to 100 · As of 31 Mar 2026

Equitree PMS protected downside during the valuation-driven correction through Oct 2025.

Since November, global uncertainty has triggered a flight of capital that has adversely affected less liquid micro & small caps — our core universe.

Period Returns

	1 Month	3 Months	6 Months	1 Year	2 Years	3 Years	5 Years
Equitree	-9.79%	-20.78%	-25.87%	-19.18%	+5.71%	+28.44%	+22.97%
S&P BSE 500 TRI	-11.37%	-13.94%	-9.62%	-3.12%	+1.32%	+12.89%	+11.76%
NIFTYSM100	-10.19%	-14.17%	-13.43%	-5.54%	-0.22%	+19.12%	+13.39%
Outperformance vs S&P BSE 500 TRI	+1.58%	-6.84%	-16.25%	-16.06%	+4.39%	+15.55%	+11.21%

As of 31 March 2026 | Returns are TWRR, net of fees | Returns over 1 year are annualised

Investors who stayed invested for 3+ years have seen capital double — outcomes driven by time, not timing
3Y rolling returns remain strong at ~34% median, reflecting consistency across volatile cycles
Best vintages came during corrections (37–38% CAGR, ~20% alpha) — lower entry prices have translated into higher long-term returns
Long-term prop capital track record: ~24% IRR (~20x over 13 years). Investors have only had losses when they sell early

Market Valuation Landscape

Ex-BFSI · FY26E earnings growth in line with 9MFY26 · As of 30 March 2026

	Median Mkt Cap	FY26E PE	10Y Median PE	Discount to LTA 30 Mar 2026	Premium to LTA 31 Dec 2025	Median Correction from 52-Week High	Median Correction from All-Time High
Large Caps 77 companies	₹1,52,471 Cr	26.5x	27.5x	-3.55%	+18.33%	-19.43%	-24.69%
Mid Caps 114 companies	₹48,681 Cr	36.6x	37.6x	-2.69%	+12.26%	-26.42%	-35.85%
Small Caps 359 companies	₹10,058 Cr	29.4x	30.8x	-4.63%	+16.87%	-33.98%	-45.24%
Micro Caps 763 companies	₹1,493 Cr	19.3x	21.0x	-8.39%	+13.30%	-43.66%	-58.14%
Equitree Capital 15 companies	₹1,800 Cr	14.21x	16.40x	-13.40%	-4.60%	-41.00%	-53.80%

1

Valuations have come back to more reasonable levels

Across segments, multiples are now below long-term averages after a period of elevated optimism.

2

The correction has been sharper in smaller companies

As you move down the market cap curve, drawdowns become meaningfully deeper, creating wider gaps between price and underlying value.

3

This is where we are seeing better opportunities

Micro caps are now trading below historical valuations and significantly below prior peaks — a setting that tends to favour patient, bottom-up investing.

On-Ground Reality Check

Early signals from industry interactions amid global tensions

Demand is Holding Up

No visible demand destruction across sectors so far
OEM schedules for April–May remain healthy across auto ancillary
Chemicals seeing strong demand; China supply disruptions supporting spreads
Some moderation possible if recent price hikes sustain

▸ Cost shock, not demand shock. Early phase of disruption

Margins Resilient, with Lagged Risk

Companies still consuming lower-cost inventory. Margins stable for now
Proactive price hikes implemented across sectors
Q4 likely to see inventory gains for those sitting on stock
Headwinds possible in Q1 if disruption persists, partially offset by higher topline

▸ Near-term compression risk, not structural. Pricing power visible

Supply Chain Disruptions

LPG restored to ~70% for commercial use. Raw materials available at higher prices, often cash-based
Logistics stretched from 4 to 7–8 days; China freight rates up 2×
Shift to shorter-term contracts (fortnightly/monthly) on RM and finished goods
Petrochemical chain facing availability constraints and pricing volatility

▸ Working capital stress + cost volatility rising across the chain

The Strong are Getting Stronger

MSMEs under labour + working capital stress. Workers returning to villages in pockets
Market share shifting to organised, well-capitalised leaders
Companies adapting with agility: alternative processes, new sourcing, innovation
Corporates preparing for structurally higher energy costs post-conflict

▸ Cycle accelerates formalisation. B2B leaders gain share

Key Takeaways

Disruption is supply-side, not demand destruction. Order books and schedules remain intact

Margin volatility is near-term and manageable. Pricing power and inventory positioning provide buffers

Structural winners are gaining market share as smaller players face working capital and labour stress

B2B businesses, where we invest, generally pass on raw material costs with a lag. Selectively, promoters are encashing the disruption via inventory gains and market share consolidation.

Periods like these tend to accelerate formalisation and set the stage for nominal growth tailwinds in an inflationary environment.

War Impact — Portfolio Analysis

We engaged directly with most of our portfolio companies’ promoters and management teams over the last few weeks. Demand outlook remains intact across the board, with management guiding for 22–25% growth. The portfolio is predominantly domestic-facing with negligible Middle East or import dependency — any near-term cost pass-through is manageable within 1–2 quarters.

Sector	Key RM	Impact Assessment & Mitigation	Correction Since War %	Risk
Agriculture	Steel, solar modules	2–3% cost impact on modules	−8.5%	Low
Batteries / Electronics	Silver, cadmium, copper	Kavach electronics (55% rev, ~50% EBIT) immune to commodity inflation. Demand-side benefits outweigh cost risks	−7.5%	Low
Textiles	None direct	Largely insulated. EU/US/UK discretionary demand at risk; port overcrowding. FOB model limits exposure	−0.6%	Low
Chemical & Fertilizer	Sulphur	Sulphur imports halted; buying locally at premium using cash reserves. Fertilizer sales stopped. Dye intermediates up	−2.9%	Med
Auto Ancillary	Forging steel, rubber	2–5% RM increase if sustained; 2 weeks safety stock; no ME exposure. Costs passed to OEMs if >15 days	−8.5%	Low
Casting	Steel, Gas	Energy supply challenged; gas reserves cover March. FOB exports unaffected. Customers not delaying shipments	−1.0%	Med
Consumer Durables	Aluminium, Steel	Export delays; domestic demand UP (LPG cuts → electric/induction). Margin pressure if RM sustains	−8.5%	Low
PEBs	HR/CR Coils	Sourced from Tata Steel/JSW/SAIL domestically. 15–20% exports may see cost rise. Domestic sourcing insulates	−11.8%	Low
Pipes	HR Coils	HR coil prices elevated since Dec. No major impact yet	−15.2%	Low
Oil Exploration	Gas pipeline	Under review for national grid connection — could increase gas volumes	−13.4%	Low
Chemicals	Crude, Base oil	Crude pressures margins; base oil supply delays threaten production. 2-month inventory buffer	−17.1%	Med
Infrastructure	Cement, Steel TMT	Largely insulated — domestic oriented. Zero demand-side impact. Minimal cost inflation expected	−16.3%	Low
Telecom Infra	—	No major impact	−11.2%	Low
Logistics	Bulk bitumen	Massively impacted — Strait of Hormuz disruptions; 100% Ancillary Infra depends on bitumen. Sourcing/logistics flow vulnerable	−31.8%	High
Innerwear	—	No direct impact. Indirect inflationary pressure on lower-income discretionary. Domestic economy-focused model	−17.7%	Low

Shakti Pumps — Addressing Concerns

₹2,100 Cr

Order Book (Feb 26)

₹50,000 Cr+

PM KUSUM 2.0 Expected Budget

~US$1bn

AIIB Maharashtra Sanction

Q3 FY26 Challenges

Deliberate deferment of ~₹200 Cr of orders to maintain working capital discipline
Elevated receivables from Maharashtra — extended monsoon + state elections
Margin pressure from adverse revenue mix and higher raw material costs
Closure of key schemes by March creating near-term uncertainty

Forward Indicators

Maharashtra released ~₹2,000 Cr toward clearing payment backlogs
AIIB sanctioned ~US$1bn for Maharashtra solar pump implementation
PM KUSUM 2.0 expected Apr/May — ₹50,000 Cr+ outlay
Order book ₹2,100 Cr as of Feb 26 — adequate revenue visibility
Management indicated improving collections, expects strong Q4

This is a timing and cash-flow discipline issue, not structural. A question of “when,” not “if.”

Portfolio Valuations

Source: Ace Equity, Equitree Capital estimates · As of 31 March 2026

#	Sector	FY27 YoY	PE FY27E	10yr Med PE	vs LTA	PEG FY27E	D/E	52-Week High Correction	All-Time High Correction
1	Agriculture	32%	14.33	24.00	−40%	0.45	0.38	−56.1%	−66.8%
2	Batteries / Electronics	20%	20.41	38.80	−47%	1.00	0.04	−41.0%	−41.0%
3	Textiles	24%	13.61	15.10	−10%	0.57	0.45	−26.1%	−38.4%
4	Chemical & Fertilizer	25%	9.38	14.90	−37%	0.38	0.27	−36.7%	−36.7%
5	Auto Ancillary	18%	10.76	17.70	−39%	0.60	0.13	−28.8%	−41.2%
6	Casting	16%	21.41	23.30	−8%	1.38	0.00	−11.2%	−11.2%
7	Consumer Durables	40%	21.49	48.60	−56%	0.54	0.40	−44.3%	−59.7%
8	PEBs	20%	11.81	14.10	−16%	0.59	0.93	−53.2%	−53.2%
9	Pipes	26%	10.75	14.20	−24%	0.42	0.05	−46.6%	−54.1%
10	Oil Exploration	—	—	—	—	—	0.06	−40.5%	−70.3%
11	Lubricants	22%	10.27	19.00	−46%	0.46	0.29	−30.5%	−36.9%
12	Infrastructure	15%	7.75	12.20	−36%	0.52	0.24	−43.8%	−53.8%
13	Telecom Infra	50%	6.90	14.80	−53%	0.14	0.54	−37.7%	−68.7%
	Median	23%	11.29	16.40	−31%	0.53	0.27	−41.0%	−53.8%

Portfolio trades ~31% below its 10-year median PE; with ~23% FY27 earnings growth, implied PEG of 0.53x points to a favourable risk–reward

Low churn is by design — each holding is continually reviewed against alternatives, with changes only when conviction meaningfully improves

Work on the ground remains active: continuous engagement with companies, evaluating new ideas, and waiting patiently for the right balance of execution and valuation

Risk-Reward Increasingly Favourable

Portfolio PE

11.3x

~31% below 10yr LTA

FY27 Growth

+23%

Median PAT YoY

Median D/E

0.27x

Largely debt-free

Promoter Track

20+ Years

Experienced management

1

Valuations corrected to long-term averages, with pockets nearing COVID lows

Multiples have reset meaningfully and are now at or below 10-year medians. Historically, these dislocations have offered the most compelling entry points for long-term investors.

2

A reset in multiples, not in earnings

Business performance and growth visibility remain intact, with most companies continuing to guide for 22–25% growth. What we are seeing is sentiment-driven compression, not fundamental deterioration.

3

Near-term volatility is liquidity-driven, not structural

Volatility may persist as the geopolitical situation evolves, but the correction appears more driven by liquidity and risk-off sentiment than any change in underlying business quality.

4

Strong balance sheets provide resilience

Median D/E of 0.27x across the portfolio allows companies to absorb near-term shocks and, in many cases, gain share through the cycle.

Disciplined Deployment

Why we are down ~25% when median portfolio company drawdown is ~40%

Valuation Discipline

Most positions entered below PEG 1, exit discipline above PEG 2. Median portfolio PE ~12x FY27 — strong margin of safety while deploying.

Cash Discipline

Held cash Sep 2024 → Jan 2025 when markets were elevated. Customised allocations across individual stocks to protect downside.

Staggered Entry

Incrementally deployed over subsequent months as markets corrected, buying at progressively better valuations.

Correction from All-Time High

-40%

Median Holding

-25%

Equitree Fund

Discipline reduced drawdown by ~20 percentage points

Cash Position by Client Vintage

2+ yrs

~5%

1 yr

~14%

6 mo

~25%

3 mo

~30%

1 mo

~40%

Fund-level cash of ~15% is a blended average across 600+ clients.

Fully deployed investors hold ~5% cash — new capital is staggered over 6–12 months.

Capital at Work

Monthly deployment as % of AUM · Jan 2025 – Mar 2026

Gross Buying

₹680

₹ Cr · 15 months

Gross Inflows

₹648

₹ Cr · 15 months

Buy / Inflow

105%

Bought more than received

Peak Month

₹100

Cr · Oct 2025

Monthly Deployment vs AUM

Gross Buying (₹ Cr) Gross Inflows (₹ Cr) Deploy % of AUM

Deployment ramped from 5% of AUM in Apr ’25 to 10–12% by Oct–Nov — buying accelerated into the correction

Investor Conviction

Capital flows & client onboarding · Dec 2024 – Mar 2026

Gross Inflows

₹743

₹ Cr · 16 months

Net Inflows

₹689

₹ Cr · After redemptions

Redemption Rate

<5%

Of AUM

New Accounts

444

Since Dec 2024

Monthly Capital Flows & Client Growth

Inflows Redemptions New Accounts (cumul.)

Peak correction window (Oct–Dec 2025) — inflows accelerated, redemptions stayed flat

Equitree — Fund Outlook

Three vehicles, one philosophy

Current Fund

Equitree Emerging Opportunities · PMS

Concentrated PE-style portfolio (~12–15 high-conviction businesses), inherently limiting capacity
Recent correction has improved entry valuations; we have ramped up deployment
₹750+ Cr raised over the past 14–15 months; continued interest from UHNIs and family offices
Approaching 4–5% ownership stakes in portfolio companies — beyond which we will pause fresh inflows
Incremental capacity of ₹250–300 Cr before the portfolio is fully deployed

Best entry point in 18 months — we encourage top-ups and fresh allocations

Fund II — New Strategy

Launching later this year

Coming Soon

Vehicle

PMS or AIF

Min. Ticket

₹3–5 Cr

Distinct portfolio — no overlap with current fund
Post current fund capacity, all inflows directed here

GIFT City AIF

India small-caps in USD — for global investors

Now Open

Status

FPI Licensed

Currency

USD

Min. Investment

$250,000+

Structure Category III AIF (IFSC, GIFT City)

Intended Investors NRIs, foreign nationals & family offices

Portfolio Similar to PMS (12–15 companies)

Subscription Monthly | No lock-in

Why GIFT City

USD Offshore Access

Dollar exposure via regulated IFSC vehicle

Tax Efficient

Fund-level gains with DTAA treaty benefits

No PAN Required

NRIs, corporates, family offices, institutions

Institutional Governance

Axis trustee, Nuvama custodian, Apex admin

FPI licenses received. Same team, philosophy & portfolio.
Onboarding now — [email protected]

Questions for Discussion

01

Market Context

How are you reading the current market environment given geopolitics and recent volatility?

02

Small Cap Outlook

Are current small-cap valuations attractive, and what will drive the next phase of performance?

03

Portfolio Positioning

Have there been any meaningful changes in portfolio strategy or positioning in this phase?

04

Sector Allocation

Which sectors are you most constructive on over the next 3–5 years, and why?

05

Earnings Visibility

How is earnings growth trending across the portfolio over the next 1–2 years?

06

Risk Management

How do you manage downside risk, especially in small caps where drawdowns can be sharper?

07

Cash & Deployment

What has been your cash stance, and how are you thinking about deploying capital today?

08

Exit Framework

What are your key exit criteria at a company level?

09

Portfolio Construction

How do you balance concentration and diversification in volatile markets?

10

Investor Behaviour

In drawdowns, should investors stay invested, add more, or wait?

11

Asset Allocation

How should investors think about allocating across large, mid, and small caps right now?

12

Closing View

What gives you confidence in the portfolio over the next 3–5 years despite near-term uncertainty?

Warren Buffett

Thank You

Equitree Capital Advisors

Equitree Emerging Opportunities PMS · Investor Webinar