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BCAD:2 – Breakout 20 Fund

Objective

India continues to be amongst the fastest-growing trillion-dollar economy in the world that is likely to reach a nominal GDP of USD 5 trillion before the end of this decade, from USD 2.6 trillion today. To support this scale, several social, and regulatory have been unveiled, and as they spread through the economy, powerful repercussions are being felt across India's consumption stack. An unintended consequence of this change is impacting the competitive ability of India's unorganized businesses. And this has led to a disruptive shift favoring India's organized businesses across various segments.

Investment Approach

The fund shall focus on a bottom-up approach for selection of securities. The securities would be identified based on fundamental and rigorous stock selection process backed by in-house research and supported by external validation. The fund shall follow a 'buy and hold' strategy but will not hesitate to sell to correct a mistake, redeploy in a relatively better opportunity, or when the stock achieves a valuation higher than is warranted. The fund would identify stocks considering qualitative and quantitative analysis including earnings growth, capital efficiency, relative margin of safety to valuations and management integrity.

Investment Risks

The fund would focus on companies in sectors where it expects a gradual shift in consumer demand from the unorganized players to the organized players. The investment process would involve analyzing multiple sectors and drawing up the list of factors which would be triggers for the migration of demand to the organized space. The key risk would be the time required for the transition to start playing out within the selected sectors. There might be stocks/sectors wherein the anticipated migration might take longer than the initially estimated time periods. Thus, it is suggested that investors take a longer-term view when investing in this theme.

Universe

The fund would be investing in companies which are operating across the following sectors,

Roti Kapda Makaan Plus, One
Food/Snacks/Masalas Home care Home appliances Financialization
Dairy & value added Personal care Kitchen appliances Hotels
QSR Chains Restaurants Clothing Cables and electricals Gaming
Rice Innerwear Paints Luggage
Non-alcoholic beverages Footwear Tiles Diagnostics
Alcoholic beverages Jewelry Sanitary ware Healthcare
Cigarettes   Pipes Consumables
Food retail   Plywood/MDF Logistics
Proteins   Roofing Travel
    Structural steel Entertainment
    Staffing  
    Office spaces  

Portfolio Structure

The portfolio is likely to have around 15-20 stocks in the PMS platform. The investor's assets will always remain in the investor's name with a SEBI registered custodian. While tracking and monitoring of investments will be active, there’s likely to be low turnover in the fund.

Benchmark: S&P BSE Midcap

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