Quest Smart Alpha Rising Leaders- Category III AIF


Key Portfolio Attributes

Fund Category: Category III AIF

Structure: Closed Ended

Tenure: 4.5 Years from the date of first closing. Extendable by 2 years, subject to approval from two thirds of the unit holders by value of their investment in the fund

No. of stocks: Around 3 – 5 stocks per sector/theme at any point of time. Around 15-20 stocks at portfolio level

Fund Manager’s Name: Mr. Aniruddha Sarkar

Fund Manager’s Experience: 16+ years

Fund Manager’s Qualification: B.Com, MBA Finance

Investment Objective

Quest Smart Alpha Rising Leaders- Category III AIF is a sector agnostic bottoms up portfolio seeking to benefit from the opportunities in the mid and small cap segment of the Indian equity market.

Investment Philosophy

The investment philosophy of the Quest Smart Alpha – Sector Rotation Fund- Category III AIF is Active management with pure focus on themes playing out as per our expectation and shifting to next emerging theme within the tenure of the fund.

Investment Strategy

The investment strategy of Quest Smart Alpha Rising Leaders- Category III AIF is to follow a Quantitative & a Qualitative Stock Selection Approach.

Quantitative Stock Selection Criteria:

  • Consistency in margin improvement and factors leading the same
  • Expenditure / Investment in A&P / R&D (depending on the business requirement)
  • History of capital allocation
  • Capital requirement of Industry / Asset turns
  • Current & past debt history
  • Working capital Cycle
  • Free Cash Flow generation
  • Payout history

Qualitative Stock Selection Criteria:

  • Management / Promoter Quality from an objective perspective based on past track record
  • Industry type Consumer, Cyclical, Converter, Innovative / Disruptive
  • Industry penetration levels especially for Consumer companies
  • Market share of Unorganized sector
  • Past track record of company in getting into new categories / adjacencies
  • Business cycle and which part of the cycle we currently are
  • Barriers to entry / Moat / Right to win
  • Succession plan / Size of promoter group

Valuations:

  • Price to Earnings
  • Price to Book
  • Price to Sales
  • EV/EBITDA
  • DCF
  • SOTP, etc.
  • Valuation is considered on both absolute and relative basis

Current Opportunities

Sectors – Retail, Travel, Finance, Consumer Discretionary

❖ Rising per capita income & increasing household incomes led by increasing women participation in jobs
❖ Formalization of economy with shift to organized sector from unorganized sector
❖ Increasing aspirations of consumers
❖ Rising demand for formal healthcare system

Sectors – Chemicals, Pharma, Hardware Manufacturers

❖ PLI & Make in India coupled with favorable external environment
❖ Rising domestic demand resulting in economies of scale
❖ Electronics hardware manufacturing led by import substitution

Sectors – Power Transmission & distribution, Logistics, Power Ancillaries, Industrial goods

❖ Private capex likely to pick up led robust demand & improving capacity utilization across several industries
❖ Infrastructure spend by government
❖ Rising power demand & increasing demand for goods movement & logistics

Sectors – Real Estate, Building material, Electrical Equipment

❖ Rising demand for residential properties led by higher household earnings & higher urbanization

❖ Strong demand for offices led by IT sector growth & demand for data centers, shopping complex, hotels etc.

Do Not Simply Invest, Make Informed Decisions

WISH TO MAKE INFORMED INVESTMENTS FOR LONG TERM WEALTH CREATION

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Do Not Simply Invest, Make Informed Decisions

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