Overview
This portfolio is diversified across sectors and companies to manage risks. It consists of 20-25 stocks, built consciously to have a low overlap with the benchmark to provide a differentiated offering. Single stock exposure is restricted to 10% of the portfolio and single sector exposure is restricted to 30%^
^This is the current portfolio construct and it may change in the future
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. This portfolio is diversified across sectors and companies to manage risks. It consists of 20-25 stocks, built consciously to have a low overlap with the benchmark to provide a differentiated offering.
We invest in structurally strong companies, that are termed as good quality companies, which have:
- Reached a minimum scale in terms of revenue
- Have gone through at least one downcycle and emerged stronger and has a consistency in cash flows
- High return on capital employed over the last 10 years
- Focuses on owning companies that are market leaders in a particular domain
Portfolio Strategy
How do we select multi-cap companies?
We look for more than good record of accomplishment in a company for it to be included in the portfolio. They should be able to meet the following criteria:
- The ability of the company to grow its sales and profits greater than industry average, over the next 3-5 years.
- The ability of the company to achieve growth without consistently resorting to additional external funding.
- The track record of the management in capital allocation, and in treating minority shareholders fairly.
The fund manager regularly reviews the portfolio to establish the best choices. The idea is to always monitor prevailing valuations which should be reasonable considering future growth prospects. And if needed, exit any stocks where the fundamental investment thesis has changed.
Investment Process
Quality is what we aim to deliver. To make it possible, we select only companies that meet our standards of investment.
- Companies with a minimum scale in terms of revenue
- Companies that have gone through at least one down-cycle and emerged stronger
- Consistency in cash flows and high return on capital employed over the last ten years
The focus is always on investing in companies that are market leaders in a particular domain. It’s our observation that over a certain time period, market leaders tend to come back stronger with a higher market share after a downturn, as weaker players usually exit the market.
The factors that help us decide quality
Companies at least 15 years old
We look for companies that have existed for 15 years to be considered eligible for our portfolio. Based on our research such companies have completed at least one full business cycle and overcome difficult business conditions. Their learnings from such experiences would be invaluable as compared to new or inexperienced companies.
Consistency in the ability to generate free cash flow
Along with profitability, we look for positive free cash flows of a company to indicate how smoothly the business is being run (without constant external funding). Positive free cash flow indicates that the company is in a comfortable financial position.
Minimum sales revenue of Rs. 400 crores
As this strategy is based on a multi-cap portfolio, we invest in large, medium, and small companies. the revenue chosen is to accommodate both medium and small companies, which would not have been possible if the revenue threshold were kept any higher. At the same time, if the company after 15 years is not able to generate the required sales revenue, then it will be chosen only as an exception.
High return on capital employed
We use Return on Capital Employed (RoCE) to measure how companies are using their total capital. If the RoCE is higher, it is better for the investor and a way to verify if the company is efficient enough to consistently earn more than its cost of funds.
Investment Approach
Investment Objective
PGIM India Core Equity Portfolio seeks to generate returns by investing in a portfolio of quality companies that are available at reasonable valuations and have the potential of superior wealth creation over long term. 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 instruments.
Basis of selection
The portfolio will identify and invest in companies with strong fundamentals which are available at a reasonable price when seen in light of business projections, projected cash flows and market value of assets. Such opportunities are available when companies are going through a period of temporary difficulty or are ignored by the market. It is a Multi-cap portfolio agnostic to market capitalisation. Primary screening is based on ability to generate free cash flows, high ROCE with filters for vintage and size.
Portfolio Allocation
It is a multi-cap portfolio. From a risk management perspective, portfolio will be adequately diversified across sectors and 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, and hence, this portfolio requires a longer holding period. Hence, this portfolio is suitable for investors with investment horizon of at least three 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
Since inception, the fund has outperformed its benchmark Nifty 50 TRI by 1.93% percentage points.
Performance as on 31st March 24
Period
Portfolio
Nifty 50 TRI
1 Month
0.10%
1.57%
3 Months
1.49%
2.92%
6 Months
6.36%
14.09%
1 Year
30.06%
30.08%
2 Year
16.72%
14.38%
3 Year
19.08%
16.31%
5 Year
14.58%
15.27%
Since Inception Date 08/07/2013
15.77%
14.62%
*Portfolio Turnover ratio for the period August 1, 2022 to March 31, 2024
Data as on March 31, 2024 for actual portfolio. 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 Nifty 500
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. 20
Portfolio
Company
Portfolio Weightage
FDC LTD
7.48%
HERO MOTOCORP LTD
6.27%
MARUTI SUZUKI INDIA LTD
6.01%
TATA STEEL LTD
5.76%
ICICI LOMBARD GENERAL INSURANCE COMPANY LTD
5.73%
SYNGENE INTERNATIONAL LTD
5.47%
NESTLE INDIA LTD
5.39%
ICICI BANK LTD
5.37%
COMPUTER AGE MANAGEMENT SERVICES LTD
5.28%
BHARAT ELECTRONICS LTD
5.08%
As of 31st March 24.
Portfolio Documents
Presentation
Newsletter
PGIM India PMS Brochure
Our Offerings
PGIM India
Phoenix Portfolio
PGIM India Phoenix Portfolio seeks out small and mid-cap companies that are close to an inflection point in their lifecycle either due to a cyclical or structural changes.
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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