Series 83 – Q3 Quarterly Call Highlights

This week we are presenting you the recording of our quarterly call that was held on 12^th Oct. The key takeaways of the call are highlighted below.

1. Earnings Growth vs. RoE Growth: Earnings growth does not inherently include RoE growth, which involves capital allocation decisions. Earnings combined with RoE expansion lead to structural IRR growth.
2. Market from Earnings View-

2. 1. Indian Market Bull Cycle: The Indian market has experienced a structural bull cycle over the past four years.
   2. Large Caps: Large caps have seen structural RoE growth with potential for further expansion, despite a decline from 2010-2020. Nifty had a CAGR of 7.5% over 11 years.
   3. Midcaps: Midcaps have experienced RoE expansion alongside a 1.5 times multiple expansion, resulting in higher IRR compared to large caps. Future RoE expansion will be selective and hence bottom up selection becomes important
   4. Small Caps: Strong flows and momentum in small caps, but risk-reward balance is crucial. PE rerating justification is higher, with selective positioning important.

3. Market from the lens of Liquidity: Structural SIP trends are strong, with domestic markets driven by domestic flows, which are now greater than 50% of FII AUM.
4. Market from the lens of Valuation: Focus on relative risk-reward, bottom-up stock picking, and sector positioning. Structural RoE expansion has made the market expensive.
5. How we think Portfolio Positioning today–

5. 1. Risk-Adjusted Returns: Emphasis on risk-adjusted returns due to the expensive market.
   2. Broad-Based Returns: Returns have been broad-based due to RoE expansion, with stock and sector-specific mean reversion expected.
   3. Positioning for liquidity is as crucial as positioning for upside, with incremental liquidity not expected at the same rate.

We have also briefed on key themes that we are interested in and also returns profile of the fund. To listen to the call recording, you may click on this link – Itus Capital 3Q Investor Call Recording 2024

We also 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