Helios India Rising Fund II

Dinshaw Irani- Chief Investment Officer of Helios India

Helios India’s Chief Investment Officer is Dinshaw Irani. He spent more than 14 years as the Executive Director of Artemis Advisors, Helios Singapore’s exclusive research advisor. Dinshaw oversaw all aspects of the study project as the CEO of Artemis Advisors, from concept formulation and industry perspective to the final recommendation. He established Sharekhan’s portfolio management services business while serving as their principal portfolio manager from 2003 to 2004 before joining Artemis in 2005. Before working at Sharekhan, Dinshaw spent more than three years as a vice president of the consumer and pharmaceutical industries’ Asian Emerging Markets team for Alliance Capital in Mumbai.

Before Alliance, Dinshaw had positions at Lloyd Securities and Sun F&C Mutual Fund. Dinshaw likes exploring new locations so that he may spend time outside in nature preserves and hiking trails. Dinshaw possesses a post-graduate diploma in rural management from the Institute of Rural Management, Anand, and a degree in commerce with honours. Dinshaw has 28 years of combined investment experience.

THEME 1

“NEW” For Private Sector / Compete With Government of India

• Since all private enterprises have the potential to succeed at the expense of government companies, India has permitted sectoral privatization without privatizing its existing government-owned companies.
• Due to superior resources, products, customer experiences, technology, etc., private-sector businesses might triumph at the expense of government-owned ones.
• Financials (Banking, Insurance), Healthcare, Education, and Infrastructure are the major sectors (rarely)

THEME 2

“New” for India / Demographic / Lifestyle Changes

• Invest in under-penetrated, even middle-class, secular themes with a “Non-zero sum” mentality since everyone can develop due to the low penetration.
• Major sectors: Air conditioning, Wealth Management and Financial Products, Mortgage, Retail, Tourism, Luxury, Vocational Education, Gaming, Liquor, Branded Goods, Work from Home, QSRs, Online, Ed-tech, etc. 
• “Unorganized to Organized” is a new subtheme brought on by demonetization, the introduction of GST, and online.

THEME 3

“New” New / Factor Cost Advantage

• Capitalize on India’s “Global competitiveness.”
• “Non-zero sum” as in these sectors Indian companies do not yet compete with each other Major sectors: IT, IT Services, Contract Research, pharmaceutical, speciality chemicals

COMMODITIES

Most of the time, the primary drivers of returns are global demand and pricing rather than Indian ones.

ONE BILLION CONSUMERS STORIES

• Helios are not interested in industries where the investor must use the billion-plus Indians as a source of potential since it inevitably suggests already heavily competitive industries.
• Numerous industries, including those in urban India, provide plenty of room for expansion.

STATE-OWNED COMPANIES

• Limited freedom to operate
• Investors who advocate for value in many of these firms overlook the fundamental fact that many of them are just departments of the Indian government.

BET ON INDIA, NOT ON INDIANS

In general, Helios oppose aggressive foreign expansion by Indian businesses. Far-flung investments are more challenging to handle (for management) and more challenging for us to assess.

The existence of even ONE of the following criteria typically makes a stock perform poorly:

• Bad theme (size of opportunity)
• Unfavourable industry dynamics
• Potential for disruption 
• Chins/weakness in management/background/strategy
• Poor corporate governance
• Low-quality accounting
• Negative medium-term triggers (in most cases, projected financial performance)
• Unreasonably high valuations

Eliminating the bad greatly enhances the likelihood of finding the good and lowers the cost of errors.

Helios create our portfolio of good firms and “developing” good companies from the pool of stocks that “cannot be rejected on any factor.”

A robust portfolio needs to have 2 kinds of stocks. 

“Good” Stocks: Offer “High Confidence in reasonable returns” (10 to 15 stocks, ~50 to 60% weight)

• This group comprises better calibre, consistently performing businesses with distinct advantages, large opportunities, and strong profit visibility.
• Helios are pleased with these firms’ anticipated success over the coming years but do not anticipate these companies to be (further) re-rated.
• If values get too high or if there are significant developments that force us to reevaluate the firm, Helios sell these stocks.
• Expected long-term compounded returns exceed the market benchmark by 3 to 5% annually.

“Emerging” good stocks: Offer “Reasonable confidence in high returns” (15 to 25 stocks, ~40 to 50% weight) 

• A collection of businesses where Helios anticipate greater profits due to the combination of early stock discovery (or re-discovery) and increased valuation of the business if it lives up to its potential
• When Helios perceive a catalyst for a prolonged recovery or re-discovery by the market, some of these stocks may be large-cap firms and mid-size ones.
• Expected medium-term compounded returns exceed the market benchmark by 5 to 10% each year.

• Long-term is a series of “1 to 3 years” short term.
• One may more clearly envision industry trends, disruption, corporate strengths and strategies, government regulations, existing management, market preferences, external environment, etc., across a 1 to the 3-year investment horizon. There is no need to stop holding the same stocks for another one to three years, and so on, if the firm is doing well.
• Longer-term winners typically surprise their managements, themselves, and their investors with their growth/success and cannot, as a result, be widely and confidently predicted far in advance. Helios have continuously owned many long-term winners in our market by purchasing stocks after screening them using our 8 criteria.

• 25-year actual track record of India’s investments (and not back-tested models or paper portfolios)
• The staff oversees and advises the FII Fund (with first-hand knowledge of FII flows, behaviour, etc.).
• Long-only and long/short strategies are managed and advised by the same staff (Shorts provide yet another perspective)
• Several team members also oversee and provide advice for an international fund (so Helios have experience with developments in other major markets)
• Senior team members have worked together for 15 to 20 years and are knowledgeable on how to handle different market stages (that invariably come up)

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