Marcellus | Post Budget Melt Down| Webinar Q1 FY 20| Saurabh Mukherjea|Rakshit Ranjan|Pramod Gubbi

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Marcellus Webinar:

We hosted our quarterly webinar yesterday. Many thanks to those who could log in to the webinar and all the very valid and interesting questions about the market, our philosophy and portfolio companies. For those who could not make it, a replay is available here.

Key points from the webinar are summarised below:

1. Rising cost of capital: Whilst the government and the RBI are doing their bit to ensure ample liquidity is available in the system, the NBFC crisis has created a dislocation of sorts in the financial system resulting in those with liquidity, especially banks and treasuries being selective about who they lend to. Furthermore, with foreign investors pulling out of the Indian market, access to capital will not be easy thereby resulting in cost of capital for most companies in India continuing to rise, whilst the handful of well-capitalised companies with strong franchises continue to drive much of the returns in the stock market.

2. Currency depreciation: With the devaluation in the Chinese Yuan, Indian exporters’ competitiveness is further eroded and hence we expect the currency to further slide from current levels.

3. Performance update: Since inception on 1 Dec 2018, the Marcellus Consistent Compounders PMS is up 5.4% net of fees and expenses whilst the Nifty is up 0.7%. For the financial year since 1st April 2019, our PMS is up 0.4% whilst the Nifty is down 5.8% as of yesterday’s close (6th Aug).

4. Ten out of the 12 stocks in our portfolio have outperformed the Nifty. Page Industries and ITC are the only stocks which have fallen significantly during this period (down 32% and 10% respectively since inception on 1st Dec). Page also has a high weighting in our portfolio.

5. Retain our conviction on Page’s competitive advantage: Given our philosophy of avoiding deep drawdowns, we have spent a lot of time in assessing our investment in Page. Our findings are detailed in our most recent newsletter and explained in detail in yesterday’s webinar. We are not reducing our investment in Page as our research continues to suggest that its competitive advantages are unaffected by recent events as further shown by continued market share. The reasons for the fall are industry related rather than company specific. The hosiery distribution channels have been subjected to disruptions from GST and over the last 3-4 quarters from the NBFC crisis which has constrained channel financing. As explained in our recent newsletter, in the past, Page has bounced back strongly from such setbacks.

We will endeavour to communicate as much as we can on our philosophy and portfolio companies through our blogs, newsletters, videos and webinars. You can access them on our website www.marcellus.in. Pls feel free to reach out to us with any further questions.

Finally, Marcellus Investment Managers turns ONE today. We would like to thank all our clients, distributors, vendors, partners and all well-wishers who have supported us in this journey. We hope to continue helping our clients compound their wealth consistently with your support.


Regards
Team Marcellus



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Note: the above material is neither investment research, nor investment advice. Marcellus does not seek payment for or business from this email in any shape or form. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India as a provider of Portfolio Management Services and as an Investment Advisor.

Copyright © 2019 Marcellus Investment Managers Pvt Ltd, All rights reserved.

Copyright © 2019 Marcellus Investment Managers Pvt Ltd., All rights reserved.

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