Exclusive Webinar on When Macros Overshadow Micros What Should Investors Do?

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Hello there!

Welcome to AIF & PMS Experts India Pvt. Ltd.

An exclusive webinar was held on YouTube where Mr Aniruddha Sarkar joined the webinar as our guest. Mr Vikas Agrawal, the Founder and CEO of AIF & PMS Experts India Pvt. Ltd. Mr Aniruddha Sarkar is the Chief Investment Officer and Portfolio Manager at Quest Investment Advisors.

Webinar Overview

Our webinar guest explained different market-related topics and opinions through wonderful presentations. He talked about multiple sectors; are Real estate and Home Improvement, Bank & Especially corporate banks, Auto & Auto Ancillaries, IT & IT Services and Chemical sectors. They discussed many industry sectors with data.
Thus it makes the understanding easier for the audience. Mr Aniruddha showed how the companies and sectors go through the market cycle.

About AIF & PMS Experts India

We have faith in India’s growth storey. We recognise the significance of investments as a driver of economic growth. And our Founder, Mr Vikas Agrawal, who is exceptionally passionate about decoding the strengths and untangling business and business management weaknesses, exemplifies this belief.

At AIF & PMS Experts India, we have envisioned a vision of fostering trust in governance, maintaining transparency, and facilitating our clients’ long-term wealth creation. Our numerous products, analytics, and tools are critical to our business and help us achieve our goals.

His vast experience, particularly in Alternative Investing, has given him a bird’s-eye view of the economy. It enables us to tap into an untapped investment segment and develop viable investment strategies.

Fund Manager Profile

Since February of this year, Mr Aniruddha Sarkar has been the CIO and Portfolio Manager at Quest Investment Advisors. He has over 15 years of experience in the capital markets, working in various roles managing money for investors across PMS, AIF, and Advisory businesses. He has a keen eye for sector themes and has played a key role in identifying many themes early in their lifecycle over the years. He spent over 11 years with IIFL group companies before joining Quest. He has a Bachelor of Commerce and an MBA in Finance.

In his previous role at IIFL AMC, he was the Portfolio Manager for IIFL Multicap PMS since its inception in 2014. He generated industry-leading performance over the five years until December 2019, which was also recognised in industry awards in 2019.

Investment Philosophy:

Rather than looking for elusive magical moments, they at Quest believe in keeping investments simple and conducting thorough basic ground research. Their investments are founded on principles that have stood the test of time and guided us successfully over the years. The investments have assisted them in both good and bad times, weathering market volatility and generating consistent outperformance.

They adhere to the following investment philosophy when looking for investable portfolio companies and building the portfolio. These are Simplicity, Management Track Record, Investing Is A Marathon, Margin of Safety; An Eye on Valuation and Sound Financials.

  • Simplicity:

A good business must be easy to understand, have a well-established market, a small number of well-entrenched players, and a clear runway. Combined with a low risk of disruption from existing or new competition, these factors can form a long-term compounding machine.

  • Management Track Record:

A capable, honest, and enthusiastic management team must support a good business. Often, such businesses are less affected by bad times, and, more importantly, they always treat their smallest shareholder as a partner. Quality management allows a company to have a strong vision plan and the resources to execute it while using prudent capital allocation and optimising risk-reward payoff. They believe that management quality is the true embedded value of a company’s long-term growth.

  • Investing Is A Marathon:

When a company is re-rated, the true beauty of equity growth becomes apparent. It is frequently the result of favourable macroeconomic conditions, such as increased sales and profitability, which leads to improved return ratios. Rather than a simple momentum approach, we hope to develop a framework that will assist in identifying these companies early on and riding the curve of expanding earnings, which will lead to a valuation re-rating.

  • Margin of Safety; An Eye on Valuation:

The utmost art of acquiring long-term equity returns is valuation. The real crux of valuation is buying growth at reasonable prices, often mixed with mathematical analysis pertaining to financial ratios. This gap provides a safety net during volatile market conditions.

  • Sound Financials:

A company’s financials are what set it apart from the competition. A company with a strong balance sheet, a strong ROE profile, a steady or rising margin profile, and a strong cash flow generation capability excites us once it meets our key qualitative parameters of business simplicity and management track record.

Investment Strategy:

Quest strongly believes that investing is both an art and a science. Experts choose portfolio companies using a combination of top-down and bottom-up approaches. Their portfolio development strategy can be summed up as follows:

  • Look for outsized upside potential regardless of sector or market cap. ​
  • Keep ears to the ground and eyes on the companies as you move across sectors with the business cycles..
  •  Look for opportunities for mispricing and avoid overpaying for businesses; keep an eye on valuation.
  •  Actively manage cash levels in the portfolio to capitalise on market volatility.
  • To avoid taking unnecessary risks in exchange for a high reward, focus on High Risk-Adjusted Returns.
    • Initially, the Bull Run led by the IT companies and old economy companies dragged at that time.
    • Sometimes Infrastructure, Capital goods, Real estate companies led the rally.
    • From 2018 to 2020, the consumption-oriented growth stocks led the rally.
    • Cyclicals, PSU banks and Technology related stocks were on top of the Bull Run after the devastating pandemic.

Things That Can Be Hazardous for Investing:

 

  •  Inflation: An increase in crude oil prices and other inflation case scenarios can harm the economy.
  • World War 3: The recent conflict between Ukraine and Russia can escalate World War 3.
  • Interest Rates: If RBI increases interest rates, it may happen that Equities would see outflows. If the interest rate of Fed Funds increases, it may lead to the reversal from emerging market equities to the US.
  • Election: Sometimes, a state election in India impacts the Indian economy.

 

Past Bull Runs – Winners and Losers:

Over the years, the growth rates of companies go through the up and down graph.

Correct investment has the growing power of the Indian economy. Economic sectors have seen growth in recent years. While corporate banks were facing challenges, the cooperative efforts of banks and the government improved the management. IT sectors’ are high, so there is a great investment opportunity. Government schemes can trigger economic growth, but investors should invest carefully.

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