Series 41 – Breaking down our Portfolio Review Q2 FY’ 2024 (Episode 1) – Construction and Reality Sector

Last week, we presented some data that profiled the return dynamics of the Small Cap Index and NSE’s top 100 companies since 2005. The data derived the importance of effectively managing risk and drawdowns during a fund’s journey to generate alpha for investors. Over the next few weeks, we will present a detailed breakdown of our Q2-FY 2024 portfolio review report, highlighting the strength and momentum of our portfolio and pockets of growth. The complete review report is available in the below link for you to read through.

Portfolio Review – 2Q FY24 – ITUS Capital

Our portfolio consists of companies with strong cash flows with the deployment of capex on the ground through internal accruals into the pockets of growth visible to the company. We invest in them with extreme focus on valuation. The previous financial year earnings has been robust and we continue to see strong annual growth in revenue and profitability the previous Quarter too.  The health of the portfolio has been in good shape with a TTM GP margin of 66% and ROCE of 21.6% that depicts our earnings capability. There are few interesting themes that we would like to highlight to you, which we will do over the coming weeks.

Construction and Reality– This week we will be elaborating on the construction and realty as a sector, how our exposure has been to this sector and our expectations.

The reality sector has been classified as a high-cost, long-duration, and highly regulated industry. However, during the economic downturn in 2008, coupled with oversupply and muted demand, many companies struggled to meet the high interest payments. The past decade witnessed a phase of consolidation, with the emergence of companies with strong financial positions that successfully navigated increased regulations that favoured the established brands. Presently, these companies are expanding with de-leveraged and robust balance sheets. The chart below illustrates a growing supply of new launches in the country, supported by strong sales. In our portfolio, we own real estate ancillaries such as Cera Sanitarywares and Kajaria Ceramics that will benefit from the increased demand in the industry.

Over the coming weeks, we will discuss more on the various sectors in which we have exposure in our portfolio. Meanwhile, to keep you updated, we’re committed to our SIP program, offering a convenient way for investors to regularly improve their 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