Amit Goyal, co-founder and chief global strategist at Pace 360, answered questions related to India’s economic situation in an interview with ET Markets on Thursday. He said: “We have been optimistic about India’s macroeconomic situation for a long time. We believe India is well positioned with several positives, including easing rural headwinds, still-strong corporate capex prospects and a cyclical recovery in the festive and wedding season.
“We believe we are in a better position after the October correction as expectations have come down,” Goyal said in an interview with ET Markets. We have a clear window of 2-3 months in which the Indian economy can perform well, provided the global recession does not worsen.
SKG India Value Fund gained over 12% in September, outperforming other PMS schemes in this and other categories.
September was a great month for our strategy. This was one of those times when investing only in the best quality stocks paid huge dividends.
Some of our core portfolio companies had shown promising results at the end of Q2FY25, leading to subsequent purchases in September.
I must also acknowledge the market sentiment, which peaked in late September. Some factors were in our favor, and being fully invested at the time worked in our favor.
Even if we look at the period to date, the returns are excellent. The fund has gained more than 24% compared to the 12% gain seen in the benchmark index. How do you choose stocks for a fund?
Our investment committee is very clear about the nature of the companies in which we invest. Although our stocks are micro and small cap, these businesses are not new.
In most cases, they are owned by promoters with more than 3 or 4 decades of experience, who have seen enough cycles and have the ability to navigate them successfully.
We avoid companies with unproven or highly experimental business models. Our universe is made up of strong, traditional companies that may be involved in something as basic as manufacturing steel tubes, but they excel in operational efficiency and operate a well-oiled machine capable of generating incremental sales and profits quarter after quarter. When it comes to our strategy, we go back to basics.
Other important factors include no equity pledge by promoters, low debt level, strong corporate governance, low price-earnings ratio, quarter-on-quarter growth and, above all, promoter commitment. These criteria play an important role in narrowing down our investment options.
Fundamentally, our approach does not involve chasing the latest trends or fads, such as electric vehicles, green energy, solar energy or financial technology, which may be temporarily popular but often lack proven business models.
Instead, we focus on finding consistent players in established businesses that are undervalued and relatively unknown, allowing us to generate alpha and potentially double the performance of the benchmark index.
