Overview
PGIM India Phoenix Portfolio seeks out small and mid-cap companies that are about to reach a turning point in their lifecycle. Especially ones that are about to experience an upturn in their sector or business. The strategy seeks to benefit from structural changes in the economy and or markets.
Phoenix Portfolio – Small Today, Large Tomorrow
Mid and Small-cap Strategy: This strategy focuses on constructing a portfolio through comprehensive bottom-up research largely focusing on mid and small-cap stocks.
Focus on Turnarounds and Secular Good Quality Businesses: We tend to buy businesses that often witness short-term cycles of decline in profitability and growth. We also look to take exposure to structurally good quality companies with strong balance sheets and cash flows.
Concentrated Approach: High-conviction portfolio with 20-25 carefully selected stocks, ensuring optimal position sizing and liquidity.
Long Track Record: Since its inception in August 2016, Phoenix portfolio has navigated multiple market cycles, delivering decent performance through disciplined investment processes.
Target Investor Profile: Ideal for long-term investors seeking exposure to turnaround opportunities and high-quality mid and small-cap companies.
Portfolio Proposition
Turnarounds and secular good quality businesses: We target companies at the bottom of their cycle, focusing on turnarounds with strong recovery potential, allocating 40-50% to such opportunities. This is balanced with quality small and midcap businesses that offer secular growth potential.
Exposure to unique industries and sectors: There are a few themes that have better representation in small and midcap space like hospitality, chemicals, home building, software products, etc.
Concentrated Portfolio:
Concentrated Holdings: A focused portfolio of 20-25 carefully selected stocks with potential to grow while managing risk.
Small and midcap approach: Bottom-up approach to select stocks in mid and small-cap space.
Low Overlap: Ensures portfolio differentiation and active management by maintaining low overlap with the benchmark.
Risk Management Principles: No more than 15% of the portfolio is invested in a single stock to mitigate concentration risk. Exposure to any single sector is restricted to 30% to ensure diversification across industries.
Dynamic Cash Management Strategy:
Residual Cash Holding: Cash is held as a residual component. The extent of cash holding is not pre-determined; it varies based on the availability of attractive investment opportunities. When opportunities are scarce, cash positions may increase to preserve capital.
Portfolio Strategy
Our Portfolio Building Strategy
To build a strong portfolio we take on a strategic mix of Structural and Cyclical companies.
Structural Businesses:
India is home to many unorganised businesses with low market share. This allows such companies to grow by gaining market share from other players and increased consumption once there is affordability and awareness among consumers. Sectors like Real Estate, Pharmaceuticals, IT Product companies, etc., are some examples. We believe this space is home to some of tomorrow’s leaders and hence, we look at these companies with a long-term perspective.
Cyclical Businesses:
These consist of companies in the small and mid-cap space which are profitable and even market leaders in their segment but are cyclical businesses. These might include companies in Manufacturing, Finance, Auto Ancillaries, Commodities, Textiles sectors, etc. The thought here is to be invested for a period of 3 to 5 years.
How we ensure you get the best.
- Screening all possible choices to create an investment universe of acceptable quality.
- Further filter the universe on the basis of growth prospects and management quality.
- Construct the portfolio using filters of valuation levels, and sector exposure limits.
Our Criteria for Company-selection
At least 75% of the investment would be made in mid and small cap companies.
Average Return on Equity (ROE):
For the last ten years, Average Return on Equity is greater than 8%. The ROE measures how efficiently the equity capital of the company is being used. The higher the ROE, the better it is for the investor, but the basic idea is to verify whether the company is efficient enough to consistently earn more than its cost of funds.
Positive Operating Cash Flows:
In more than six out of the last ten years, positive operating cash flows provide a holistic view of a company’s financial health. This does not solely rely on P&L items such as net profits. A healthy operating cash flow indicates that the company is generating enough cash to re-invest and grow its business.
Market Cap:
Market Cap should be between ₹750 crore to ₹30,000 crore. A mathematical model comprising the above variables is used to arrive at the investment universe.
Investment Process
Key Parameters
Our portfolio manager employs a disciplined approach to identify and manage investments, focusing on quality, growth potential and risk management.
Identifying potential growth opportunities:
The portfolio manager seeks companies with above-industry growth potential over next 3-5 years, strong internal cash generation without heavy reliance on external funding and management with a solid track record in ethical capital allocation and fairness to minority shareholders.
Reasonable valuations considering future growth potential:
The portfolio manager is mindful of current valuations, ensuring they are reasonable relative to future growth prospects, and conducts periodic portfolio reviews to maintain optimal investment choices.
Sell Discipline:
We implement a disciplined approach to selling stocks when the original investment thesis fundamentally changes, ensuring capital preservation. Additionally, if valuations appear to exceed reasonable PEG levels, we may consider exiting the position.
Businesses occasionally may witness cycles of disruption or downturns due to many factors. A few triggers for us to look at turnaround opportunities using a bottom-up approach:-
- Lower Profitability vs historical trends
- Compressed profit margins vs historical trends
- Proven track record and capital efficiency
- Mergers and acquisitions or change in management/ownership or new technology
Investment Approach
Investment Objective
The objective of the portfolio is to generate capital appreciation over the long term by investing in quality small and mid cap Indian companies. However, there can be no assurance that the investment objective will be achieved.
Types of Securities
Funds would be predominantly invested in listed equity and equity related securities.
Basis of selection
The central theme of the product is that the Portfolio Manager would choose stocks of companies that, in his assessment, are close to an inflection point in their lifecycle either due to cyclical or structural changes. The Phoenix Portfolio, as the name suggest, would concentrate on companies whose financial and operational performance (profit margins, market share etc.) at the time of investment would be below the long-term average performance displayed by the company.
Portfolio Allocation
At least 75% of the portfolio would be invested in the shares of small cap and mid cap companies. Pending deployment of funds of the portfolio in securities in terms of the investment objective, the funds of the portfolio may be parked in short term deposits of scheduled commercial banks or in the liquid and debt schemes of PGIM India Mutual Fund.
Investment horizon
Markets usually take time to spot value, hence it is advisable for investors to be invested for at least 3 years.
Risk Associated
Please refer to disclosure document.
Portfolio Manager
Surjitt Singh Arora,
Principal Officer and Portfolio Manager - Portfolio Management Services,
PGIM India Asset Management Pvt. Ltd.
PGIM India Asset Management Pvt. Ltd.
Surjitt Singh Arora is Portfolio Manager – Portfolio Management Services at PGIM India Asset Management Private Limited.
Surjitt Singh Arora has more than 18 years of rich work experience in the Equity Markets including over 8 years in the asset management industry. In his last stint, Surjitt was Head - PMS and Head - Principal Officer with Tata Asset Management, where he was managing Tata ACT and Tata Emerging Opportunities Portfolio. Prior to that he was with Tata Mutual Fund as Equity Research Analyst.
Surjitt holds a Bachelor’s degree in Management Studies from Sydenham College, Mumbai and a Master’s degree in Management Studies from Sydenham Institute of Management and Research (SIMSREE), Mumbai.
Performance
Period
Portfolio
Nifty 50 TRI
Nifty Smallcap 250 (TRI)
1 Month
-12.80%
-5.79%
-12.60%
3 Months
-19.12%
-8.10%
-21.78%
6 Months
-20.28%
-11.98%
-23.62%
1 Year
-0.69%
1.89%
-6.94%
2 Years
17.12%
14.41%
25.31%
3 Years
13.67%
10.93%
16.78%
4 Years
17.76%
12.42%
19.98%
5 Years
19.55%
15.96%
24.50%
Since inception date 01/08/2016
12.03%
12.93%
14.19%
Performance as on February 28, 2025
*Portfolio Turnover ratio for the period August 1, 2022 to February 28, 2025
Data as on February 28, 2025. Source: Internal Research
Past performance may or may not sustain in future ; w.e.f. April 1, 2023, the benchmark has changed to Nifty 50 TRI from the Nifty Smallcap 250 Index
To view the portfolio’s performance relative to other Portfolio Managers, you may click here
For the full disclaimer on consolidated portfolio performance, please refer slide no. 31
Portfolio
Security Name
Portfolio Weightage
PROCTER and GAMBLE HEALTH LTD
6.34%
PARADEEP PHOSPHATES LTD
6.12%
TIPS MUSIC LTD
5.57%
BHARAT RASAYAN LTD
5.17%
GALAXY SURFACTANTS LTD
5.06%
AFFLE INDIA LTD
4.75%
K P R MILL LTD
4.37%
BIRLA CORPORATION LTD
4.22%
ARTEMIS MEDICARE SERVICES LTD
4.19%
TIMKEN INDIA LTD
4.19%
Portfolio Documents
Presentations
Our Offerings
PGIM India
Core Equity Portfolio
We measure quality as a mark of longevity. That’s how we select companies at reasonable valuations and with the potential of creating long-term wealth in a multi-cap portfolio.
PGIM India
Equity Portfolio
We measure quality as a mark of longevity. That’s how we select companies at reasonable valuations and with the potential of creating long-term wealth in a multi-cap portfolio.
PGIM India
EQUITY PORTFOLIO – SERIES I
PGIM India Equity Portfolio – Series I (High Conviction Themes) seeks to generate returns by investing in a portfolio of quality companies that are beneficiaries of efficient operating.
PGIM India
EQUITY PORTFOLIO – SERIES ii
PGIM India Equity Portfolio – Series II seeks to generate returns by investing in a portfolio of predominantly quality stocks with good fundamentals.
PGIM India
Equity NDPMS Portfolio
Under the Non Discretionary Services, the Portfolio Manager will manage the Client’s portfolio in accordance with the directions received from the Client and pursuant to Client’s consent being received for each investment/transaction.
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