Care PMS Growth Plus Value

To buy equity of companies listed on Indian stock exchanges to generate long term returns

Bottom-up, Stock specific approach

• Shortlisting of companies on ongoing basis (on any fundamental trigger) or during quarterly earnings season (after applying Care PMS proprietary quant screeners) for detailed analysis

• Extensive fundamental research undertaken on shortlisted stocks and their peer group to spot trend or turnaround in that segment or industry

• Take account of recent developments in that segment or industry and meet industry participants across the value chain and to confirm inferences

• Decision to add a company or to replace and existing company taken only after consensus among all three investment directors

• Detailed analysis about company’s strategies, management’s execution capabilities and on pedigree of management followed Q & A with management or investor relation

Portfolio Structuring

Portfolio structuring involves determining appropriate allocation of weight to individual stocks based on the risk profile of the investor. This is followed by re-assessment of weights and re-balancing strategically using our propriotary quant tools. Individual portfolios are constructed with mix of 5-7 different sectors and well diversified among 12-16 companies. Further, there are limits on individual stock and sector weightage.

Risk Management

•  Disproportionate Risk-Reward: A detailed analysis of probable downside corresponding to probable upside is done before adding it to the portfolio

• Diversify: While individual client portfolios that we manage are fairly concentrated. We do diversify portfolio companies into growth, turnaround and value buys

• No Model Portfolio: Individual portfolios are constructed based on the timing when funds are made available and what opportunities are present, as we are very cautious about the valuation at which we acquire equity of a company

• Continuous Monitoring: Real-time monitoring of any news or developments in portfolio companies. Quantitative review of individual portfolios as a part of portfolio re balancing exercise

Exit Process

• Partial Profit Booking– when there is price rise on account of euphoric environment not backed by fundamentals.

• Portfolio Re-balancing– when the weight of individual stocks or sector within the portfolio goes above limits, we may consider shaving off the weight of a certain company in the portfolio.

• Shift to better opportunities– research is a continuous process which result in new shortlisted companies. When an alternative with better prospects is found, an existing portfolio company may be replaced.

• Fundamental Deterioration– Exit is warranted when there is a change in fundamentals of the company due to which earnings expectation is revised downwards

• External / Macro Dynamics– Exit is warranted when there is a change in macros in which company operates due to which earnings expectation is revised downwards

• Price reaches fair value– When earnings grow to a level as envisaged and reach fair value post which earnings plateau.