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.
The strategy 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.
The strategy 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.
The strategy 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 |
Unifi’s core competency lies in conducting deep bottom-up fundamental -oriented research to curate client portfolios. Basis our investment philosophy, our portfolio construction framework prioritizes a balanced mix of stocks across sectors based on our investment thesis and conviction, ensuring adequate diversification amongst such quality businesses. The portfolio’s concentration at any time purely reflects our sectoral or stock-specific investment thesis. While maintaining responsible diversification by limiting company/sector level exposure is an important priority, we do not have rigid allocations. When we evaluate a business, we are not biased about its market capitalization but are concerned more about the size of opportunity that the business can offer. Hence, our portfolios are generally market cap agnostic.
Our typical portfolios endeavor a good balance between diversification and concentrated exposure. We periodically review the portfolios to maintain an appropriate portfolio mix depending upon investment objective, market conditions, risk tolerance and liquidity requirement to ensure diversification.