PORTFOLIO

MANAGEMENT
SERVICES

MIDCAP STRATEGY
 INVESTMENT PHILOSOPHY
• The philosophy aims to construct a predominantly midcap portfolio that
displays a balance of potential returns with the corresponding risk
• Create a well-diversified and sector agnostic portfolio that focuses on medium
to long term wealth creation
Benchmark Index: • Develop an actively managed portfolio in the midcap segment
NIFTY Midcap 150 • Construct a portfolio that evaluates the securities and their future market
prospects through a valuation matrix

RESEARCH PROCESS
Medium to Long
Term Investment Purnartha Dynamic Midcap Strategy selects companies that:
Horizon • Display sales growth, margin expansion and increasing net profit
• Are Net Cash or moderately leveraged (Debt-to-Equity Ratio < 0.5)
• Have shown strong fundamentals over a select time period
• Are expected to show a healthy trend of growth
• Will exclude stocks from the public sector
Dynamic Risk
Management
OUR FOCUS IS
• To create an actively managed portfolio of approx 70% midcap and balance the
rest amongst the large and smallcap sector
• To develop a well-diversified midcap portfolio consisting of 18-25 securities,
with weights to each stock aligned to the valuation and risk-reward
DYNAMIC MIDCAP STRATEGY
PORTFOLIO DEVELOPED BY COMBINING THE BEST OF DIFFERENT INVESTING STYLES

MARGIN EXPANSION STRATEGIC GROWTH ORIENTED

STYLE VALUATION STYLE STYLE
Investing in midcap companies that Portfolio will consist of stocks with a High volume growth driving strong
show increase in top line numbers specific trigger relating to revenue
aligned with GDP growth and buyback/acquisitions/demerger/
bottom-line growth of similar events that could unlock Investing in midcap companies
approximately 15%+ fuelled by value in the future that show strong top-line and
improvements in margins bottom-line growth of 20%+
Alternatively, stocks that are
currently at "low valuations" and are
Stocks will be held in the portfolio “Buy and Hold” approach for long
likely to rebound to mean reversion
with a medium-term view term appreciation
These stocks will have a short term
investment horizon and will be
churned after achieving the targeted
returns

PORTFOLIO COMPOSITION
~30% ~30% ~40%
INVESTMENT FRAMEWORK - I
(DEVELOPED BY INCORPORATING MULTIPLE VARIABLES)
150 STOCK UNIVERSE
(Mid-cap sector agnostic portfolio)

SCUTTLEBUTT ANALYSIS
On-ground market checks and
validation by our team

GOOD CORPORATE GOVERNANCE

NET CASH / VERY LOW LEVERAGE

STRUCTURAL / TACTICAL ADVANTAGE

Such as likely mergers/demergers, unlocking of value,
current valuation at low levels with re-rating potential

AVAILABLE AT REASONABLE VALUATIONS

Available at a valuation lower than historical multiples,
hence signalling scope for a mean reversion

120 stocks
INVESTMENT FRAMEWORK - II
(COMBINING THE BEST OF DIFFERENT INVESTING STYLES )

120 STOCK UNIVERSE

Scuttlebutt Analysis + Low Leverage + Good Corporate Governance

Decent Valuations with Stocks at Lower Valuations High Growth Potential

Typically Available at
Promising Margin Expansion and Triggered by Events Expensive Valuation

Margin Strategic Growth Oriented

Expansion Style Valuation Style Style

Portfolio of 18-25 Stocks

Dynamic switching among
these investing styles for
optimal alpha generation
 “DYNAMIC” RESEARCH PROCESS

Focus on Adequate
Margin of Safety

Unbiased and
RISK & REWARD BALANCE VALUATION Research Driven
Approach
We look for acute correlation between We carefully assess the valuations of Towards Stock
securities, sectors, and relevant micro different stocks. Valuations refer to the Selection
as well as macroeconomic factors to price of a stock relative to its
dynamically mitigate risk. underlying financial performance. This
offers us a perspective on the security
We consider risk-reward balance while whether it is overvalued, undervalued,
selecting stocks for our clients' or fairly valued.
portfolios. Choosing Well-Run
By considering risk and reward Businesses at
We aim to identify securities that offer equation, we aim to build portfolios
the potential for good returns, while that offer the potential for good returns
Attractive Valuations
also managing risk. while also being diversified and
managed for risk.
 PORTFOLIO CONSTRUCT

Investment Rebalancing
Universe & exit
discipline
▪ Periodic rebalancing will
be done at the discretion
Asset of the portfolio manager in
▪ Investment into listed Indian Allocation & Liquidity line with the investment
stocks only Stock guidelines
▪ Investment into companies Risk ▪ Mandatory trimming of the
Selection
part of Nifty Midcap 150 portfolio at a point where a
Mitigation &
index stock breaches ~12% of the
Diversification current portfolio value
▪ Exit from businesses on
achieving investment
objective

▪ Allocation across diversified sectors with ▪ Liquidity of all the invested

under-weights and over-weights based on sector /
▪ Diversified across sectors stocks are tracked closely.
company attractiveness in terms of growth and
with the addressable Securities are identified in
valuation
market covering India and such a way that they can be
▪ Portfolio size of 18 to 25 stocks
overseas. liquidated over specific
▪ Allocation in a single stock up to ~8% at invested
▪ Filtering out companies duration with minimal impact
value
with high debt-to-equity
ratios and pledge of
promoters' shares
 STOCK STORIES - MARGIN EXPANSION STYLE
Illustrative Example - Endurance Technologies Ltd
Mar-17 Mar-19 Mar-22 5 Year CAGR 6M FY22 6M FY23 Current
Including Covid Year Growth
Revenue 6,351 7,510 7,549 4% 3,581 4,474 25%
Operating Profit 928 1,129 965 1% 504 511 1%
Profit After Tax 391 495 461 3% 230 235 2%
Operating Profit Margin 15% 15% 13% - 14% 11% -
Net Profit Margin 6% 7% 6% - 6% 5% -
(Amounts in Rs Cr)
Notes:
• Margins have corrected from 15% to 11% due to commodity pressure which have started to correct
• Topline growth has been historically soft but has been gaining market share
• Have made acquisition to enter newer businesses like EV for 2 Wheelers
• Has recently acquired new clients like Ather and Hero Electric and using them to cross sell old products as well
• Valuations look cheap on the relative to its trading history
• The above-mentioned stock is used for illustrative purposes only and may or may not be part of the actual portfolio
• The performance related information provided herein is not verified by SEBI
• Past performance is not indicative of future returns Endurance – Price to Sales

4.00

3.50

3.00

2.50

2.00

1.50

1.00

Cons MCAP/Sales(x) Average P/Sales 1 SD P/S 1 SD P/S

 STOCK STORIES - STRATEGIC VALUATION STYLE
Illustrative Example - Balkrishna Industries Ltd
Mar-17 Mar-19 Mar-22 5 Year CAGR 9M FY22 9M FY23 Current
Including Covid Year Growth
Revenue 4,444 5,210 8,295 13% 5,921 7,443 36%
Operating Profit 1,103 1,303 2,009 13% 1,506 1,139 -17%
Profit After Tax 736 774 1,435 14% 1,061 797 -4%
Operating Profit Margin 25% 25% 24% - 25% 15% -
Net Profit Margin 17% 15% 17% - 18% 11% -
(Amounts in Rs Cr)
Notes:
• Margins have contracted from 25% to 15% due to raw Material pressure in the first 9 months of year. Raw Material Prices have started to correct
• Topline growth continues to be around 15% in long term
• Stock price has had a recent correction from Rs.2439/- in Aug'22 to Rs. 2075/- now and hence looking interesting
• The above-mentioned stock is used for illustrative purposes only and may or may not be part of the actual portfolio
• The performance related information provided herein is not verified by SEBI
• Past performance is not indicative of future returns
Balkrishna - Price to Sales
9.00

8.00

7.00

6.00

5.00

4.00

3.00

2.00
01-Jun-2020
01-Jun-2019

01-Apr-2020

01-Jun-2022
01-Jun-2018

01-Apr-2019

01-Nov-2019

01-May-2020
01-Apr-2018

01-Nov-2018

01-May-2019

01-Aug-2020
01-Sep-2020

01-Jun-2021

01-Apr-2022

01-Nov-2022
01-May-2018

01-Dec-2018

01-Feb-2019
01-Mar-2019

01-Aug-2019
01-Sep-2019

01-Dec-2019

01-Feb-2020
01-Mar-2020
01-Jan-2020

01-Apr-2021

01-Nov-2021

01-May-2022
01-Feb-2018
01-Mar-2018

01-Aug-2018
01-Sep-2018

01-Jan-2019

01-Jul-2020

01-Nov-2020

01-May-2021

01-Dec-2021

01-Feb-2022
01-Mar-2022

01-Aug-2022
01-Sep-2022

01-Dec-2022

01-Feb-2023
01-Jan-2023
01-Dec-2020

01-Feb-2021
01-Mar-2021

01-Aug-2021
01-Sep-2021

01-Jan-2022
01-Jan-2018

01-Jul-2019

01-Oct-2019
01-Jul-2018

01-Oct-2018

01-Jan-2021

01-Oct-2021

01-Jul-2022

01-Oct-2022
01-Oct-2020

01-Jul-2021

Cons MCAP/Sales(x) Average P/Sales 1 SD P/S 1 SD P/S

 STOCK STORIES - GROWTH ORIENTED STYLE
Illustrative Example - UNO Minda Ltd
Mar-17 Mar-19 Mar-22 5 Year CAGR 9M FY22 9M FY23 Current
Including Covid Year Growth
Revenue 4,471 5,908 8,313 13% 5,898 8,347 46%
Operating Profit 534 725 885 11% 610 922 56%
Profit After Tax 310 286 356 3% 240 456 131%
Operating Profit Margin 12% 12% 11% - 10% 11% -
Net Profit Margin 7% 5% 4% - 4% 5% -
(Amounts in Rs Cr)
Notes:
• Diversified Auto Ancillary with 72 plants across world focusing on 5 segments targeting 2Wheeler & Passenger Vehicles
• Growing business by entering newer areas like EV OEM
• Acquisition of newer clients like 2W American auto major for some of its Products
• Consistently increasing kit value per vehicle
• The above-mentioned stock is used for illustrative purposes only and may or may not be part of the actual portfolio
• The performance related information provided herein is not verified by SEBI
• Past performance is not indicative of future returns
 WHY PURNARTHA?

RESEARCH RESULTS
• The research team conducts an • The research methodology aims to
extensive due diligence process create a portfolio of best businesses Pan- India presence
comprising macro indicators, industry and investment themes to generate
growth trends, etc. to get a view on the alpha for the investment.
economic outlook, valuations, and
• A review mechanism ensures stocks
prospective financial growth
with potential to generate alpha over
trajectory of the selected stocks.
the benchmark index are retained.
• The Fund manager analyses "softer"
issues such as corporate governance Managed/ Advised
and management outlook, in addition assets over ₹9,000 Cr
to conducting an in-depth study of
diverse data points.
• This helps the Fund manager to
construct a portfolio of high-quality
businesses with strong growth Ably supported by a
potential.
par-excellence
buy-side research
RELATIONSHIPS team of 20+ members
• Purnartha keeps investors informed through quarterly detailed results notes on the
stocks held in the portfolio, interactive webinars, and newsletters on any important
market developments. These provide an understanding of Purnartha's view on the market
and outlook for the future.
• A Relationship Manager and team of Investment Counsellors are available to assist and
answer any portfolio-related queries throughout your journey with Purnartha.
PURNARTHA’S GROWTH STORY
2011 Purnartha* takes flight as an equity investment adviser
with a unique philosophy for long- term wealth generation

2013 Purnartha gets it’s SEBI investment adviser registration

Purnartha begins building a pan-India presence by laying the

2015 foundation of its Mumbai office. Subsequently, branch
expansion was undertaken over the next few years

2016 Purnartha sets up a vertical for rendering investment

advisory services to institutional clients

2020 Purnartha makes its foray into Portfolio Management Services

Purnartha launches an Alternative Investment Fund (Category III).

2021 Purnartha introduces a new Investment Advisory product
- ‘Sampurna’

*The Company was formally incorporated in March 2011 as Capmetrics

Technology Solutions Pvt. Ltd. The name of the company was later
changed to Capmetrics Investment Advisers Pvt. Ltd in July 2015 and
to Purnartha Investment Advisers Pvt. Ltd in September 2017 2022 Purnartha Portfolio Management Services crosses Rs.1,000 cr
in Assets Under Management
 KEY PEOPLE

ROHIT JAIN DEVENDRA PHADKE ASHISH CHUGH

Fund Manager Director Institutional Head
Rohit is a Chartered Accountant and Devendra Phadke is a Chartered Ashish Chugh with over 20 years of
PGDBM (Finance) and has over 13 Accountant with over 18 years of experience in the financial services
years of experience in Equity experience in Equity Research and industry. An MBA in Finance from
Research for Institutional investors. analysis spanning markets in India Pune University with experience in
and abroad. business development , product
Rohit has built extensive knowledge management and equity advisory,
in financial modelling and valuations He has been instrumental in building he has worked with some of the
with sector expertise across major the proprietary research biggest names in the industry.
industries. As CA, he is also very well methodology for stock selection and
versed with taxation, auditing and has used his experience to test data An industry veteran, with extensive
compliance, which only adds to his with a view to select the most interest in the field of Financial
existing wealth management and suitable stocks for the Purnartha Economics, he has an eye for detail
market know-how. portfolio. and looks at data with a slightly
different lens.
DYNAMIC MIDCAP STRATEGY PLAN

Plan 1 Plan 2
Fixed Management Fees 2% 1%

Hurdle Rate NIL 10%

Performance Fees NIL 20%

• Taxes as applicable.
• Other charges at actuals.
• The above fees represent yearly charges.
• The fees mentioned here for respective investment options is indicative. For complete
disclosures on fees and expenses please refer to the Disclosure Document available on the
Portfolio Manager’s website.
• Minimum capital investment is Rs. 50 lakhs.
• We follow High Water Mark principle.
• Investors have the option to be on-boarded directly for our Portfolio Management Services,
without intermediation of persons engaged in distribution services.
• Premature exit loads: 3%, 2%, 1% of NAV, if exited before 12, 24 & 36 months respectively.
 PORTFOLIO MANAGEMENT SERVICES

MIDCAP STRATEGY

PURNARTHA INVESTMENT ADVISERS PVT. LTD.

GSTIN: 27AAECC3706G1ZX I CIN No: U72200PN2011PTC 138994 | Call us at: +9190110 55553
Portfolio Manager I PMS SEBI Regn. No: INP000007021
Validity: Perpetual

32/33 Rachna, Dr Ketkar Road, Off Karve Road, Erandwane, Pune - 411 004 I servicedesk@purnartha.com I www.purnartha.com

Disclaimers:
Investments in securities markets are subject to market risks and there is no assurance or guarantee that the objectives of the investments / PMS products / clients will be
achieved. Prospective investors are advised to review the Disclosure Document, Client Agreement, and other related documents carefully and in its entirety and consult their
legal, tax and financial advisors to determine possible legal, tax and financial or any other consequences of investing under the Portfolio Management Services of Purnartha
Investment Advisers Pvt. Ltd. ("Portfolio Manager"), before making an investment decision. The Disclosure Document is available on www.purnartha.com. Past performance
of the Portfolio Manager does not indicate the future performance of the Portfolio or performance of any other future portfolios) of the Portfolio Manager.

Nothing contained in this document is verified or approved by Securities and Exchange Board of India (SEBI). The stock(s)/Sector(s) mentioned in this material do not
constitute any recommendation of the same and the portfolios may or may not have any future positions in these Stock(s)/Sectors). In preparation of this document, the
portfolio manager has relied upon certain data/inputs from some external parties. The Portfolio Manager does not assure the accuracy or adequacy of such data/ information.
Nothing contained in this document shall be construed as an investment advise and the Portfolio Manager shall not be responsible or liable for many loss or damage arising
from the use of this material by anybody in any manner. Investors have the option to be on-boarded directly for our Portfolio Management Services, without intermediation of
persons engaged in distribution services.
V. 02.2023