Finance
Carnelian Capital Shift Strategy
Shift Strategy (PMS)
- Strategy designed to capture structural decadal shifts presenting large opportunity in
- Manufacturing led by conducive regulatory and global environment
- Tech evolution empowered by digitalization globally
- Concentrated QGARP (quality growth companies at a reasonable price) portfolio
- Blend of mid & small cap listed companies having
- niche core competence & large opportunity size
- Proven track record
- impeccable management capabilities
- Stock holding : 20-25 ; Benchmark against BSE 500 TRI
- Subjected to stringent Carnelian filters & forensic checks (CLEAR framework)
Pandemic accelerated 2 structural shifts
India on the cusp of manufacturing boom on account of
Govt. Reforms
- Focus on Atmanirbhar Bharat
- Manufacturing boost by production linked incentive schemes
- Tariff & non-tariff barriers
- State labour reforms
Cost Competitiveness
- Labour: 1/2-1/3x China
- Logistics & power costs = China
- Lowest tax rates globally @ 17%
- China’s cost advantages have significantly narrowed down
China + 1 Shift
- Led by anti China sentiments
- Over dependence on China to create huge opportunity for China +1
Strong Domestic Markets
- Domestic markets + exports/ imports = economies of scale
Government initiatives and reforms
Further impetus through tariff & non-tariff barriers
India hardly used non-trade tariff barriers like China/other countries which is set to change;
- No global tenders less than INR 200 cr
- No automatic FDI approval to 200 countries sharing borders
- Special registration required for participating in contracts with neighboring countries
Aided by cost competitiveness
China+1 shift will create big opportunities
Which sectors will benefit
Who will benefit – characteristics of companies
- Core competence/ niche capability
- Proven track record / platform
- Strong balance sheet
- Strong Governance
- Existing presence (market share)
Technology
Key emerging tech shifts accelerated post pandemic:
- Digitalisation
- Cloud Migration
- Software as a service
- IT services
- Tech enabled platform businesses
Technology – IT Services
- Covid has prompted companies worldwide to rethink & shift; Indian IT Tech companies an important clog in the wheel
- Demand for digital spending is “global” & supply is only “local”
- IT services exports industry to grow from USD 225bn in 2022 to USD 350bn by 2026
- 50% of the revenue getting spent as salaries/wages in the economy as first order effect which will boost consumption. Second and third order effect yet to follow.
Performance
Faster, Stronger, Cheaper
Holdings
