Series 72 – Q2’2024 Quarterly Call Highlights

We have been receiving inquiries on our Quarterly call recordings. This week we would like to bring to you some key take aways of our quarterly meeting.

We find different types of investors as we speak to our partners and clients –

1. Investors going really aggressive and deploying money to small caps focussed funds
2. Investors who are holding cash, being cautious and wanting to deploy money in case of a correction.

We believe both styles might work on prediction if and when we know the correction can occur the market.

We are, In India as well as globally, in an inflationary cycle, which will work good for equities, hard assets, gold, real estates. Positioning of portfolio with the three decision making mechanism becomes important-

            1. Company to buy

            2. Exposure or position sizing

            3. Deployment and Cash positioning

These decisions determine our ability to outperform over cycles.

1. Value of understanding Cycles-What we believe at ITUS is the value of understanding cycles and understanding the positioning of portfolios at the right business at the right cycle.
2. Validating Cycles and Decisions- (Minutes- 04:23)- In the right cycle, companies that benefit from that cycle often show ROE (Return on Equity) expansion. We are overweight in sectors such as Auto, Auto Components, Oil & Gas, and Telecom, which have demonstrated ROE expansion.
3. Importance of High ROE Businesses- (Minutes-06:10)- High ROE companies provide downside protection even if growth projections are incorrect. By not compromising on ROE, portfolios are better protected during market downturns.
4. Positioning of ITUS Portfolio- (Minutes- 09:54)-In an inflationary market, cyclical businesses tend to perform well. We have consciously positioned our portfolio in growth segments we believe in, even if this makes us appear contrarian.
5. Why do we believe this in Inflationary Cycle- (Minutes- 11:04)- We have shown the correlation between telecom tariff hikes and CPI inflation. The telecom sector is deleveraging, which is expected to continue. Additionally, the differential between US and India rates is the lowest in 25 years, and a Fed rate cut does not necessarily mean an RBI rate cut.
6. Market Valuations- From a broad market perspective, the P/E ratio is below the median range, and the P/B ratio is 10-11% above long-term averages. This indicates that the market is neither cheap nor expensive. It is important to avoid sectors where froth has been created and invest in areas with true growth potential.
7. Domestic Flows- DII flows have increased significantly over the past seven years. Despite market cyclicality and corrections, SIP money continues to flow into the market, which we believe is a structural trend.

To listen to our complete call please click on the link below –

Itus Capital 2Q Investor Call 2024 – ITUS Capital

We will come back with more interesting information on the portfolio and outlook on the market in the following weeks.

 

Also, we keep writing to you about our SIP program that presents investors with a convenient avenue to regularly infuse capital into the client’s portfolios. Feel free to check out the benefits for your clients. If you need more info, reach out to your dedicated relationship manager at [email protected].

These weekly episodes are now available in our website for your quick read and you may access the same in the below link.

Weekly Enlightenment Archives – ITUS Capital