Aditya Birla Core Equity Portfolio

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About Company

The authority behind Portfolio Management Services is Aditya Birla Sun Life AMC Limited. Aditya Birla Sun Life AMC Limited has a section called Portfolio Management Service. Aditya Birla Sun Life AMC Limited (ABSLAMC) is a joint venture between the Aditya Birla Group, a well-known Indian conglomerate, and Sun Life Financial Inc., a significant worldwide financial services firm based in Canada that was established in 1994.

Asset Management

Heritage

  • Founded in 1994, one of the oldest in India
  • A JV between Aditya Birla Group & Sun Life Financial Inc since 2001
  • Have seen the market evolve across different asset classes over the years.
  • Driven by client-centric product Innovation
  • International presence in Dubai, Singapore, and Mauritius.

Market Dominance

  • One of the top AMC’s in India with MF AUM of over 2,92,638 Cr (May 2023)
  • Over 7.9 million investor accounts (May 2023)
  • Strengths across different asset classes

Alternate Business

Best in Class Management

  • Offer portfolio management services, alternate & offshore investment solutions to HNIs and Institutions
  • Managing / advising Rs. 12,365 Cr. of assets as on May 2023
  • 13 member dedicated investment team for Equity, Fixed Income and Real Estate, with a cumulative experience of 100+ years
  • Focus on delivering sustained investment performance and portfolio differentiation.
  • Strong and robust risk management and governance framework

Fund Snapshot

Portfolio Name Core Equity Portfolio
Structure Discretionary PMS
Nature Open ended
Market cap Multi cap
20-30
Investment Manager Aditya Birla Sun Life AMC Limited (ABSLAMC)
Benchmark Nifty 50
Portfolio Manager(s) Dhaval Mehta
Tenure Minimum 3 years
Minimum Investment Rs. 50 lakhs
Management fee 2.5% per-annum (Exclusive of Taxes)
Performance fee Nil

Investment Philosophy

To identify & capitalize upon the prevailing market inefficiencies in a Simple, Timely & Efficient manner

  • Focus on Businesses: With ability & commitment to grow earnings faster than Nominal GDP
  • Purchase at a Reasonable Price: Entry Level valuations which accord “Margin of safety”
  • Buy Companies that have: Large Opportunity Canvas, Credible Management, Emphasis on Capital Efficiency, Superior return ratios

Investment Process

  • Investment Universe: Portfolio Universe as per fund mandate
  • Stock Screening: Financial Modelling & Due Diligence, Quantitative & Qualitative Screener
  • Portfolio Optimization: Risk reward analysis & Portfolio optimization
  • Portfolio Construction: Portfolio of high conviction 20–30 names
  • Monitoring: Periodic monitoring, Stop loss Triggers, Maintain Sell Discipline
  • Investor Servicing: Fund Performance, Reporting & Investor Servicing

Screening & Monitoring

Screening

Fundamentals

  • Return on Equity >15%
  • Net Debt / EBITDA less than 2x
  • Improving margins & Turnover Ratios
  • Aggregate Portfolio liquidity

Valuation

  • Higher EPS Growth, RoCE & Net Debt to EBITDA vs benchmark
  • Large Opportunity Canvas

Governance

  • Promoter’s conduct & Management Integrity
  • High Pledge & Accounting Red Flags
  • Limited Equity Dilution in recent past

Financial Modelling & Due Diligence

  • Visible Earnings CAGR > 15% in medium term
  • Sustained Competitive Advantage led by Unique Value Proposition
  • Interaction with investee companies & its ecosystem

Monitoring

  • Stop loss Triggers: If loss on stock is higher than benchmark on trailing 3 months by more than 30%
  • Periodic Monitoring: Quarterly Monitoring, Event-Based Triggers
  • Maintain Sell Discipline: Poor Capital Allocation, Weakening Competitive Position, Any emerging governance issues

Core Equity Portfolio: Investment Objective & Strategy

Investment Philosophy

  • Follows both Top down & Bottom up approach
  • Industries with strong operating dynamics
  • Businesses core to the India growth story
  • Unconstrained by Market Caps, Sectors, or Themes
  • Attractive Valuation with “Margin of safety”

Wealth Creation Approach

  • Recurring Winners – High Quality businesses with consistent growth/returns profile
  • Companies with Scalability and Resilience
  • Benchmark-agnostic
  • Multi Cap Universe
  • Concentrated Portfolio ~ 20–30 stocks

Value Drivers

  • High ROEs/ROCEs
  • Sustainable earnings growth
  • Low leverage
  • High quality franchise, product, service
  • Superior management team

4 Pillars of the Investment Process

Concentrated Portfolio | Benchmark agnostic | Multi-cap universe

  • GDP growth pattern tilted in favor of few industries

Sustainable growth over medium to long term in select industries

  • Recurring Winners: Focus on businesses that have consistently created VALUE

Favorable industry operating dynamics key to wealth creation, Consistent growth/returns profile, reflected in high ROE/ROCE

  • Unique strategy based on Superior Screening process

Extensive research to identify future winners, Comprehensive alert system to track industry wise valuations

  • Attractive Valuation with “Margin of Safety”

Buy quality businesses at a discount to their intrinsic value

Pillar 1: GDP growth patterns favor some sectors more

India GDP

Decoupled, stable and sustainable returns over long term

Private Consumption (55-65%)

  • Food, beverages, tobacco
  • Housing, fuel, power, water
  • Transport & Communication
  • Misc. goods & services
  • Clothing & Footwear
  • Furnishing & Maintenance
  • Healthcare
  • Restaurants & Hotels
  • Education & Recreation

Cyclical, levered to domestic policy and global economic recovery

Exports (20-25%)

  • Export of goods
  • Export of services

Gross Capital Formation (30-35%)

  • Public Sector
  • Pvt Sector
  • Household

Pillar 2: Recurring Winners

  • Research over the long term proves that shareholder wealth creation is mainly determined by strong operating dynamics such as competition levels, ease of entry by new players, bargaining power of buyers/suppliers etc.
  • Focus on industries with lower competitive intensity that are more direct beneficiaries of consumer spending, enjoying stable growth, and are less vulnerable
  • Companies with superior management and strong business models coupled with favorable industry operating dynamics generate superior value and returns consistently

Industry dynamics – Key to capture value

Commercial Banks

  • Entry barriers in the form of licenses
  • Very limited customer bargaining power

Pharmaceuticals

  • Large and growing addressable market
  • Entry barriers in form of size, capital, regulations & research capabilities

IT Services

  • Arbitrage-India’s cost advantage vs. global players
  • Limited supplier power (employees) in terms of salary costs

Capital Goods

  • Large & growing addressable market
  • Strong and large balance sheets acting as performance anchors

FMCG

  • Brand franchise and distribution scale-driven entry barriers
  • Ingrained sustainability, healthy margins & return ratios

Pillar 3: Effective Screeners backed by Fundamental Research

Superior screening process

  • Extensive fundamental research to identify future winners that create superior and sustained value
  • Comprehensive alert systems to track industry wise valuation of each company
  • Identify growth industries and businesses at attractive valuations

Bottom-up Fundamental Research adds conviction

  • Focus on understanding company strategy, management, and execution
  • Track sector developments, meet industry participants across value chains and company management to discern changing trends

Bottom-up Fundamental Research

  • Industry Analysis
  • Financial Analysis
  • Company Meetings
  • Plant/Factory Visits
  • Dealer/Channel Checks
  • Management Evaluation

Pillar 4: Attractive Valuation with “Margin of Safety”

  • Buy quality growth stocks at a discount to their intrinsic value
  • Proprietary screeners enable discovery of the undervalued stocks that will create significant value over medium to long term
  • Invest in a company only if there is a visibility of a minimum threshold return and limited down-side

About Fund Manager

Dhaval Mehta, Portfolio Manager (Equity)

Dhaval Mehta, has more than nine years of expertise managing and researching stocks. Consumer Staples & Discretionary, Retail, Building Material, Cement, and Media sectors are Dhaval’s primary areas of competence. He managed funds totaling more than $200 million with ASK Investment Managers prior to joining ABSLAMC, achieving excellent results during all financial cycles. He has held positions at Emkay Global Financial Services, Ventura Securities, and Infosys before joining ASK.

Qualification: MBA from Narsee Monjee Institute of Management Studies Mumbai and have done its Bachelor of Engineering from D.J Sanghvi College of Engineering Mumbai.

Salvin Shah, Portfolio Manager (Equity)

Salvin Shah, who has more than nine years of expertise in equity research and portfolio management, is an expert in handling Indian stocks. By monitoring portfolio risk, he strives to optimize returns for the investors. He has been successful in spotting trends and stocks at a very early stage, which has led to investors earning multi-bagger profits. He was a Co-fund Manager for Sanctum Wealth Management’s PMS division before to joining ABSLAMC. Salvin worked in the stock research teams at Edelweiss Securities and Athena Investment Management before to joining Sanctum.

Qualification: Member of Institute of Chartered Accountants of India (ICAI) and a commerce graduate from Mumbai University.

Industry Allocation

Sector Allocated Percentage
Financial Services 27.0%
Auto 9.5%
Information Technology 8.5%
Healthcare 8.3%
Capital Goods 8.1%
Services 7.2%
FMCG 6.7%
Cash 5.8%
Telecom 4.3%
Oil & Gas 4.1%
Construction 4.1%
Construction Materials 3.4%
Consumer Durables 3.0%

Market Cap

Large Cap 69.6%
Mid-Cap 14.2%
Small Cap 10.4%
Cash 5.8%

Top 10 Holdings & Weights

Top 10 Portfolio Holdings % of Net Assets
ICICI Bank Ltd 6.7%
Bajaj Finserv Ltd 5.1%
Sun Pharmaceuticals Industries Ltd 4.9%
HDFC Bank Ltd 4.6%
Infosys Ltd 4.5%
Interglobe Aviation Ltd 4.3%
State Bank of India 4.2%
Bharti Airtel Ltd 4.1%
Reliance Industries Ltd 4.1%
Larsen & Toubro Ltd 4.1%

Investment Approach

The portfolio invests or proposes to invest in listed equity & equity related instruments with the aim of generating long term capital appreciation & income in the form of dividends. It can also invest in money market instruments & units of mutual fund. Stock selection is done through a combination of ‘Bottom up’ approach, i.e. analyzing the fundamental attributes of the company & competition & ‘Top down’ approach, i.e., analyzing the macro economic factors & industry growth characteristics. Features of the companies can include – High quality with consistency in growth, high ROE, low leverage & high potential for growth. It is a Multicap portfolio unconstrained by any market segments like market capitalization (large cap – mid cap), sectors, themes etc.

Book a call with our experts

For any queries, contact us on Mobile: +919561619571, Landline: 020-48627339,Toll Free: 1800 210 1995, Email: [email protected]     Whatsapp-logo

Disclaimer: Investing Involves Risk. This document is for information purposes only and should not be viewed as a legal offering document or solicitation. Offers to invest in this fund are made only by the Discretionary Portfolio Management Services Agreement. Past performance does not guarantee future results and there is no assurance that the managed accounts will necessarily achieve their objectives. We do not guarantee any returns in the hand of investors not we take any sort of accountability for the performance of the scheme. The above-mentioned data is collected from the respected Fund house please verify the same at SEBI website.