Investment

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Investment Process

“In investing, like in sports, the winner is the one who makes the least mistakes. Skillful elimination is the key to success.”

Our Ethos

Client first

Clients are the focus of our existence.

Agility

In an ever-changing work dynamic, we keep the golden words from John Maynard Keynes close to our heart, “When facts change, I change my mind, what do you do Sir. “

Golden Rules

We live by the 2 golden rules of Warren Buffet:
Rule No. 1- Never lose money,
Rule No. 2- Never forget Rule No. 1.
Hence Return of Capital is more important than Return on Capital.

Integrity

Integrity is non-negotiable.

Our Investment Philosophy

The core of our Philosophy lies in investing in companies with long term scalable and sustainable growth, businesses with strong moats, good corporate governance, strong execution and financial discipline.

These companies should have products or services which can make them one of the leaders in their respective sectors.

We use a GARP (Growth at a Reasonable Price) Style to identify and invest in our portfolio companies through our Proprietary Investment Framework ELECT.

We focus on Bottoms up research and are sector and benchmark agnostic. We focus on clean balance sheets for companies which have potential to generate operating cashflows (Small Cap) and free cashflows (Mid and Small Caps).

We are believers in potential cashflow generation in the business rather than Profitability in the PL statement.

Our Investment Philosophy

  • The core of our Philosophy lies in investing in companies with long term scalable and sustainable growth, businesses with strong moats, good corporate governance, strong execution and financial discipline.
  • These companies should have products or services which can make them one of the leaders in their respective sectors.
  • We use a GARP (Growth at a Reasonable Price) Style to identify and invest in our portfolio companies through our Proprietary Investment Framework ELECT.
  • We focus on Bottoms up research and are sector and benchmark agnostic. We focus on clean balance sheets for companies which have potential to generate operating cashflows (Small Cap) and free cashflows (Mid and Small Caps).
  • We are believers in potential cashflow generation in the business rather than Profitability in the PL statement.

Investment Framework

E

Excellent Management Pedigree

  • Prudent Capital Allocation and Conservative financial management.
  • Skin in the game/Shareholding Interest.
  • Conflicting businesses.
  • Superior Execution track record.
  • Honest, Passionate, Hunger for Growth

L

Longevity and Sustainability of Business

  • Competitive Advantage/ Moat Brand, Distribution, Switching costs, Technology, Low cost, Scale.
  • Entry Barrier-Network Effect, Regulatory, Logistical.
  • Strong Product Profile and New Product/Business Development

E

Earnings Growth

  • Growing Industry/Opportunity Size.
  • Market Share Gain, Geographical Expansion, New Products Opportunities.
  • Long term Sectoral Tailwinds.
  • Growth Vs Market growth Estimate

C

Capital Efficiency

  • High Return on capital/ Equity.
  • Low capital  intensity- High Asset Turns, Low Working capital
  • Strong Operating Cash Generation OCF/EBIDTA.
  • Dividend Payouts/Efficient Capital deployment

T

Turnaround/ Value Mispricing/Contra Opportunities

  • Price Value mismatch We are value seekers.
  • Business in Transition Management, Product, Geography.
  • Out of favor –Industry, Company available cheap.
  • Special situations Spin offs, Acquisitions

E

Excellent Management Pedigree

  • Prudent Capital Allocation and Conservative financial management.
  • Skin in the game/Shareholding Interest.
  • Conflicting businesses.
  • Superior Execution track record.
  • Honest, Passionate, Hunger for Growth

L

Longevity and Sustainability of Business

  • Competitive Advantage/ Moat Brand, Distribution, Switching costs, Technology, Low cost, Scale.
  • Entry Barrier-Network Effect, Regulatory, Logistical.
  • Strong Product Profile and New Product/Business Development

E

Earnings Growth

  • Growing Industry/Opportunity Size.
  • Market Share Gain, Geographical Expansion, New Products Opportunities.
  • Long term Sectoral Tailwinds.
  • Growth Vs Market growth Estimate

C

Capital Efficiency

  • High Return on capital/ Equity.
  • Low capital  intensity- High Asset Turns, Low Working capital
  • Strong Operating Cash Generation OCF/EBIDTA.
  • Dividend Payouts/Efficient Capital deployment

T

Turnaround/ Value Mispricing/Contra Opportunities

  • Price Value mismatch We are value seekers.
  • Business in Transition Management, Product, Geography.
  • Out of favor –Industry, Company available cheap.
  • Special situations Spin offs, Acquisitions

Risk Management

We follow GARP (Growth at a reasonable price) strategy while investing. This ensures we buy at a reasonable price and have a bias towards value limiting price risk

We focus on businesses that have some niche or are evolving as market leaders with qualities like strong management, governance and balance sheet. As they scale up they generate strong cashflows and return ratios  which limit risk.

No stock to be more than 12% weight and No sector more than 35% at the time of entry (may differ in customized portfolios depending on mandate). Portfolio risk management is through sector diversification and stock weight management.