Series 17 – Stages of business life cycle in ITUS

In the previous episode, we discussed our GPCG Framework, which serves as the foundation for building our client portfolios. This week, we will understand the decision-making process at different stages of a business’s lifecycle within our portfolio. We primarily focus on four distinct stages while evaluating businesses –

1. Buying – During this phase, our decision to invest in a business is based on several factors, including its cash flow growth, cost of capital, and return on reinvested capital. We chose those businesses with sustainability and are competitive nature in the current market scenario.
2. Exposure – In this stage, we evaluate the scalability of the business and assess the potential for market expansion within the industry. Taking these factors into consideration, we carefully determine the optimal exposure range for the business within our portfolio.
3. Allocation – Taking into account the pricing power of the business and the prevailing market dynamics regarding supply and demand, we make appropriate adjustments to the position size. This allows us to either increase or decrease our exposure to the business as needed
4. Exit – In cases where there is no value creation for minority shareholders or if we find that the corporate governance falls short of our expectations, we evaluate the possibility of exiting the investment either partially or entirely. Additionally, if a business has experienced a significant run-up in its valuation, we may also consider exiting the position either entirely or in stages.

We consider a maximum timeframe of three years to assess and evaluate businesses, as we believe this period provides us with sufficient visibility on their expected growth and prospects. During this duration, we continuously monitor and analyse the businesses to make informed investment decisions, thus carefully constructing each portfolios.

Over the next few weeks, we will elaborate our each phase of our decision making process to give you more insights on our portfolio building. Till then wishing you a great weekend.

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As a part of our ongoing commitment to keeping you informed, we remain dedicated to our SIP program, providing investors with a convenient avenue to regularly enhance their portfolios. We encourage you to explore the benefits of this program for your clients. If you require more details, please don’t hesitate to reach out to your dedicated relationship manager at [email protected].