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. Single stock exposure limit is 10% of the portfolio, while single sector exposure limit is 30% of the portfolio*.
*This is the current portfolio construct and it may change in the future
We focus on mature businesses that can capitalise on opportunities presented by structural changes. Small and mid-cap companies may allow investors to gain exposure to themes where large caps have limited presence.
Some of them include:
Software Product Development
India is seeing emergence of IT product companies offering distinguished products and services from their larger counterparts.
Discretionary Retail
This segment is a beneficiary of rising per capita GDP and higher discretionary spends. Many sub-segments like footwear, clothing brands, food and retail chain have limited or no representation in large caps.
Housing
Housing is likely a long-term story. Transparency in the sector has gone up post implementation of RERA and the competition will likely come down over time. Home building companies will also be a beneficiary of the trend with good demand for tiles, sanitary ware, plywood, etc. and have a better representation in the small and mid cap space.
Chemicals
The sector is witnessing vibrancy in terms of growth and profitability. Lots of business is flowing to India with China clamping down on pollution.
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
How we select and manage small and mid-cap portfolios.
We start by determining growth prospects and management quality. While a good track record of a company is necessary, it is not sufficient to be included in the portfolio. We look for the following
- The ability of the company to grow its sales and profits over the next 3-5 years
- The ability of the company to do this without consistently resorting to additional external funding
- The track record of the management in capital allocation
When is the stock sold under this portfolio?
- When the fundamental thesis for buying a stock changes
- When the valuation is unable to explain the stock’s price
- When for the same perceived level of risk, we spot a superior opportunity
- When there is a redemption request
Cash Strategy
- The holding of cash is a residual strategy, i.e., the portfolio manager does not pre-decided the extent of cash.
- If suitable investment opportunities are not available at a given point in time, cash is held to that extent.
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
Performance as on 31st March 24
Period
Portfolio
Nifty 50 TRI
1 Month
-2.19%
1.57%
3 Months
-4.90%
2.92%
6 Months
3.47%
14.09%
1 Year
36.12%
30.08%
2 Year
18.48%
14.38%
3 Year
23.02%
16.31%
5 Year
15.46%
15.27%
Since Inception Date 01/08/2016
13.34%
14.53%
*Portfolio Turnover ratio for the period August 1, 2022 to March 31, 2024
Data as on March 31, 2024. 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
Company
Portfolio Weightage
ARTEMIS MEDICARE SERVICES LTD
7.90%
SANDHAR TECHNOLOGIES LTD
7.53%
RBZ JEWELLERS LTD
7.49%
RADICO KHAITAN LTD
6.98%
HAWKINS COOKER LTD
5.85%
GREENPLY INDUSTRIES LTD
5.36%
VST TILLERS TRACTORS LTD
5.34%
CARBORUNDUM UNIVERSAL LTD
5.11%
THOMAS COOK I LTD
4.86%
C E INFO SYSTEMS LTD
4.64%
Portfolio Documents
Presentation
Newsletter
PGIM India PMS Brochure
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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