Moat

Our Mission

We want to create 500 Rupee Billionaires in 20 years or less using emerging moat businesses by compounding money consistently by more than 25% CAGR

Emerging Moat

Struggling small caps/ start ups Proven mettle companies small and mid Young companies Mature companies Waiting for disruption
Revenue Fluctuating Steadily and rapidly growing Stable – small or no growth Stable or declining
Operations history No or bad Consistent for at least 2-3 years Long Very long
Source of growth Entirely future hope Catalyst in place and very next few quarters growth Been growing for long and slowly growing No growth

Five characteristics to look for while chosing potenial business to invest in

  • A strong leadership team
  • An industry poised for growth
  • Commanding market share
  • Strong sales growth
  • A large target market

Management Integrity, high shareholding , better reputation, Changes in shareholding patterns.

Consistency in Revenue , EBIDTA , Profit Growth , ROE , ROCE and Margins.

Business Scaleability, sustainability, market shares, product pricing powers, Durable competitive advantage.

Qualitative Framework

Corporate Governance : Accounting redflags, promoter track/reputation records, Third party transactions , tax and dividends.

Are Big investors, FII , DII interested in these stocks? Buying interest.

Valuations ? Unless attractive price that can give at least 3X in 4years.

Selection Framework

The Goal is to create great wealth for our clients with consistent high CAGR in coming 2-3 years using the 5GCPM framework, which is proprietarily developed, practiced and enriched on a continuous basis.

5 growth Factors

Sales,
Profits,
Volumes,
Margins,
Market Share.

Corporate Governance

Tax evasions, dividends, High promoter holdings, Related party transactions, Too many subsidiaries, Management Reputation, Free cash flows.

Practicability

Probabillistic Approach, Feasibility: constraints of net blocks-fixed assets, cash in hand, team capability, demand for sales, Hurdles in achievement?, What can go wrong in plan?

Magic Formula

7 parameters are combined to form one single signal as derivative of them and gives best possible indication for entry & exit strategies.

Stock Criteria

  • Only 12-14 stocks in portfolio. Higher the conviction, higher is the allocation.
  • Mostly Midcap category stocks ranging from MCAP 2000 cr to 70000 cr Market cap.
  • Only extraordinarily convincing great quality small caps.
  • Criteria : Companies with ongoing or about to do for next several quarters 10% plus sales growth & 25% plus profit growth
  • Return on equity/Capital of 18% plus ,Companies with higher Operating cash flows to Profit ratios, Lower cash conversion cycles , Less requirement of working capital.
  • X factor : The business growth catalyst factor that makes company to shift its trajectory path upwards in terms of its sales, profits , margins, size and market capitalization. This factor makes a regular good company or decent size company to become significant bigger company.
  • Only when your midcap becomes large cap, large returns are possible.
  • Buy companies which will be part of Nifty or Nifty next 50 companies in coming years instead of just Nifty companies.

Allocation

Sector allocation limit is 15%

Stock Allocation limit is 12%

No stocks trading below 200 days moving average.

The larger Universe

  • Food companies
  • Speciality Chemicals
  • Niche high advantage Pharmaceuticals
  • Proprietary Software Technology
  • High growth consumption brands
  • Profit making platform companies
  • Auto Ancillaries
Clearly Defined Exit Strategy

Most important decision is when to exit : MAGIC formula

  • Management deviation
  • Absence of further growth factors ahead
  • Change in broader industry dynamics
  • Visible signs of company decline.(market share, mind share, image, competition attraction,
    overcrowded space)
  • Partial profit booking as and when required
  • Better opportunity
  • Two quarters performance review