The scheme's fund manager Rohit Singhania follows a bottom-up approach in selecting stocks which are expected to demonstrate high earnings' growth in the next two-and-a-half years. In choosing stocks, he looks at a long history of valuations -preferably ten years. After comparing a stock's current valuation with respect to its historical valuation and also its peers', Singhania takes into account various return ratios - return on equity, return capital employed -and cash flow to arrive at a investment decision.
This strategy has paid off as the scheme has consistently beaten its benchmark Nifty 500. In the past three-year and five-year periods, the scheme has given 23.5% and 19.5% returns, respectively, while it 23.5% and 19.5% returns, respectively, while benchmark Nifty 500 has given 15.2% and 13.6 % returns in the same period, respectively. At present, Singhania is bullish on companies which belong to materials and industrials sectors.
In these sectors, Singhania prefers companies which have completed their capital expenditure, gained market share despite rise in valuation, decent order book and relatively better balance sheet (debt to equity ratio in the range of 1-1.25).These companies are L&T, Maruti Suzuki and Hindalco.
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