Investment philosophy

We want to invest in companies with the following characteristics: 

  • Average Business @ deep discount or above average business @ moderate discount.
  • Small companies with big market shares in niche sectors.
  • Strong companies in cyclical downturn.
  • EV/EBITDA < 5x & EV/OCF <  10x  *[EV = Enterprise Value, EBITDA = Earnings before Interest, Tax, Depreciation & Amortisation ,OCF = Operating Cash Flow]
  • Companies operating at low capacity utilization with strong orders expected to ramp up in the near future. 
  • Strong promoter track record of delivery & smart capital allocation. 
  • We generally stay away from Financials, Real Estate, Gems & Jewelry & Technology. 
  • Business insulated from technological disruption. 
  • Business with high value addition. 
  • Scope for earning & multiple expansion.
  • Companies with very low or negative EV due to cash, investments or surplus real estate. 
  • Track record of volume & unit realization growth without debt and equity dilution. 
  • Companies operating at low or negative Working Capital. 
  • We avoid companies in tender business or where the company is unable to pass on increases in input prices to its customers. 
  • Businesses with low CAPEX requirements.
  • Thinly traded counters with low volumes.
  • Cos. doing regular share buy backs (which provides insurance in a bear market as the company would be able to take advantage of lower share price by extinguishing more shares via buy back thereby reducing share capital & increasing EPS permanently.)
  • Cos. with change in management leading to improvement in efficiency & corporate governance.
  • Unpopular, hated, hopeless, tainted (unfairly) cos.
  • We generally avoid cos. with fixed price contracts or annual price reduction contracts with customers.