Ambit TenX Portfolio

Fund Snapshot

Investment Process of Ambit TenX Portfolio

• Companies Market Capacity Exceeds 500 Cr.
• Ambit is a good and tidy foundation
• Check to see if the businesses are active in an underserved market with lower per capita consumption.
• Industry analysis, management meetings, bottom-up research, and channel checks
• 15-20 firms in a concentrated portfolio, mainly mid- and small-cap enterprises
• Observe the potential for profits of the portfolio firms.
• An average of 15% to 20% every year.

You must keep two things in mind:

• Concentrating on the positive leads to gains.
• Maintaining “clean” is essential for managing drawdowns.

Why the Ambit TenX Portfolio?

• • Playing the India Growth Story
  • • • The next ten years will be marked by structural growth.
      • India is truly “shining.”
      • Hockey stick curve in per capita income
        • India is at a crossroads — low-interest rates, rapid formalization, a robust capex pipeline, and government reforms.
  • Long Term Portfolio That Aims at Structural Wealth Creation
  • • • Investing over more than five years is ideal.
  • Playing the Earnings Growth Story in the Mid-Small Cap Space
  • • • Identify the large/Mid caps of tomorrow
  • High-Quality Companies in Niche Segments
  • • • Low penetration with a lot of room for development
      • India manufacturing theme (China+1)
  • Highly Differentiated Product Offering
  • • A strong concept that has been formed in-house
    • Focused on a consistent compounding of earnings
    • The process is the fund manager

The Investment Strategy of TenX

• The Indian economy is expected to develop at a steady pace.

• •  GDP will rise 3x or more in the next decade on the strength of structural growth factors.
  • India is expected to be only the third country to accomplish this milestone.
  • US$10tn mark

• The same is expected to benefit mid-and small-cap firms.

• • Expect consistent double-digit profit growth for broader markets due to structural 13 percent nominal GDP growth.

• TenX portfolio to leverage this opportunity.

• • Companies with a ten-fold increase in earnings during the next 12-15 years.
  • Low penetration, competent leadership, and a light balance sheet are the major driving elements.
  • Over the following decade, the portfolio should yield a CAGR of 18-21 percent.

• Think like a company owner and focus on long-term earnings growth.

• • Returns will automatically follow.

Portfolio Operation Structure

Stringent Quantitative Filters

• Each product is built on a well-researched and back-tested foundation to produce the investing universe.
• High-performance thresholds over lengthy periods considerably reduce the likelihood of weak performers or low-quality firms entering the investing universe.
• Accountability and corporate governance are not jeopardized.

Experienced Team & Deep-Dive Research

• Dedicated and knowledgeable research staff
• Ambit’s Institutional Equity influenced research methods.
• The Investment Committee must approve all investment choices.
• Advantages of being a part of the broader Ambit group
• Concentrate on what you can learn, and what matters.

Focus on Earnings Growth + Earnings Quality

• When investing in high-quality firms, there is less focus on timing.
• Companies with a track record of success and leadership qualities are preferred.
• Past track record + Future sector potential + Current management capabilities = Comfort on delivering quality earnings

Risk Management

• Because returns do not average out, concentrated portfolios produce the best results.
• Due to stable performance in secular industries, there are fewer drawdowns.
• Compounding’s strength is realized when a long-term strategy is combined with minimal turnover.

Unique Feature

Playing the India Growth Story

India is genuinely “shining,” with a hockey stick curve in per capita income at an inflexion point. Low-interest rates, quick formalization, a solid capex pipeline, and government reforms are priorities for the coming decade.

A LONG-TERM PORTFOLIO THAT SEEKS TO CREATE STRUCTURAL WEALTH:

The ideal investing period is greater than five years.

Identifying the large/Mid caps of the future will help you play the earnings growth story in the mid-small company space.

High-quality businesses in specialized industries:

• India’s manufacturing sector has tremendous development potential and low penetration (China+1)

Offering a really distinctive product:

Strong internal philosophy; concentrated on steadily compounding returns; the method is the fund manager.

What Drives Success for Corporate India?

Their recent study demonstrates that, in addition to firm-specific competitive advantages, the following three elements are crucial for a company to outperform continually:

• Pristine accounting
• prudent capital placement.
• Exemplary leadership and a lack of political ties.

Clean Accounting

Since November 2010, the top 60% of the BSE400 equities have outperformed the bottom 40% by a staggering 12% annually.

Capital Allocation with Caution:

• The aggressive capital allocation practises of Indian businesses are among the most costly to their owners.
• exemplary leadership and a lack of political connectedness
• Political connectedness is seldom a key competitive advantage for businesses in India.

How to present:

• Rigorous quantitative filters:
• Each option is based on a framework that has undergone extensive study and testing to create the investing universe.
• A high threshold for performance over extended periods of time considerably reduces the likelihood of underperforming or subpar firms entering the investing universe.
• Corporate governance and high-quality accounting are not compromised.

The deep-dive research team and experiment team; committed and experienced research team; research methodologies influenced by Ambit’s Institutional Equity; investment committee approves all investment choices; advantages of being a part of the wider Ambit group.

Concentrate on what is vital and what can be known.

Concentrate on earning quality and earning development

Less preoccupation with timing is necessary when investing in superior-calibre businesses; businesses with a track record of consistency and leadership qualities are preferable; past performance plus future sector potential plus current management skills equal comfort in producing excellent earnings.

Portfolio Composition & Characteristics

• Strong leadership & talent management
• Industry opportunity size with entry barriers
• Scope for horizontal/ backward integration
• Low penetration
• Leveraging technology for consistent innovation
• Competency & execution with consistency
• Strong brand equity & customer experience
• Distribution strength & network optimization

• Stellar track records of capital allocation in terms of RoE
• Low debt with the median portfolio company cash positive
• The median market cap of the portfolio is Rs.22,222 cr.
• Growth potential above the comparable index
• Reasonable valuations for quality stocks

Management of risk

• Concentrated portfolios produce the best returns since the returns do not average out.
• Lower drawdowns since secular sectors have consistently performed well
• Realizing the potential of compounding with a long-term perspective and minimal churn