pms: PMS Talk: Kshitiz Mahajan highlights I.N.D.I.A. methodology to pick stocks for portfolio

In an interview with ETMarkets, Mahajan said: “Our philosophy stands on 4 pillars – Innovation, High quality and compliance management, ROE and Earning growth in excess of 15%, and Profitability increasing with expanding margins,” Edited excerpts:

Thank you for being part of the show – ETMarkets PMS Talk. SEBI in one of the regulations said that AIF provides the options of direct plans to investors – what do you make of this direction and do you think this will put the PMS industry in the spotlight?
Regulator has a view to offering a cost-effective platform across investment vehicles.

Clients who can manage things or understand equities or have time to do research themselves can opt for direct plans

But, as an investment vehicle, we feel that PMS will gain as it has its own edge –

Ticket size – Rs 50 lacs
No exit load

More transparent
No locking
Individual holdings of stocks
You can take stock transfer
More personalised

You have 1 PMS scheme – Digital Compounders. How has your journey been so far?
We launched our Portfolio Management Services (PMS) on 9th May 2021 and we got very good traction in the first year of its inception only. We staggered the entry in equities and parked the funds for over 2 months.

The response was overwhelming, and we started getting top-ups as well as referrals from new clients.

Too early for me to talk about return and performance, but we are in line with the index in most portfolios.

For the Digital Compounders category What is your investment philosophy?
It’s time for India and Our investment philosophy is I.N.D.I.A

What are Digital Compounders?
Digital compounders are businesses that are ahead of the curve in:
Adoption of technology at every stage of the value chain – back end to front end Digital transformation with ROI focus on every process in the organization Investing in technical prowess & abilities ahead of the conventional standards Innovation led capex

Creating strong economic moat and returns for all stakeholders Innovation and digital transformation at the heart of everything.

Which sectors are you finding value or investing in?
We have a diversified portfolio with a bottom-up stock-picking strategy.

We have BFSI, IT, Materials, Consumer Discretionary, and Healthcare as the top sectors.

It’s not by choice but as a philosophy and opportunities in the above sectors.

Our philosophy stands on 4 pillars

1. Innovation
2. High-quality and compliant management
3. ROE and Earning growth in excess of 15%
4. Profitability increasing with expanding margins

What is stock transfer? And, how does it work?
So, in PMS you can make money through a cheque, or you can take in existing stock portfolios of clients and rebalance it as per your portfolio.

Normally, we have seen that individuals end up buying a lot of stocks in portfolios depending on their research, and market information as advice. They are not able to bucket them well or review them well.

They end up holding not-so-good or average companies also.

Your investment is also a full-time job, and one needs a professional setup to take care of it.

We do reviews for existing sales stocks and send our recommendations, basis our research to clients and in most cases take over their stock portfolio.

Stocks remain in the Client’s name but are managed by us. We bucket it well and ensure to have a professional approach.

Who should switch to the PMS category where the minimum investment is Rs 50 Lakh? Usually, investors diversify their holdings across MFs – how can PMS give an edge if they want to shift to this category?
Any individual with more than Rs 1.5-2 cr portfolio can add one PMS to his or her holdings.

We in our PMS have 28-30 stocks – which reduces concentration and unsystematic risk for clients.

So, you are diversified, and you have individual holdings.

Where do you see the PMS industry headed in FY24? Any opportunities or threats you see for the industry?
We were having 4.5 cr demat accounts pre covid. Now the count stands at 11 cr. Unique pans are around 7 cr. The love for the direct holding of stocks will increase only.

Presently the industry size is almost 3 lacs crore. I see with per capita income increasing and love for stocks picking up, professional management of stocks will increase.

I see the industry growing at 25-30%.

Threats –

On a lighter note, the biggest threat is not parking funds in equities.

Short-term parking is the only threat while investing into equities.

When you are a long-time investor in equities or PMS there is no threat.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)