From Bottom To Best The Incredible Turnaround Of 3 Invesco Funds Power Talks Ep 12

TITLE: From Bottom to Best: The Incredible Turnaround of 3 Invesco Funds l Power Talks Ep 12 CHANNEL: PowerUp Money DATE: 2025-11-23 ---TRANSCRIPT--- When you joined these fund schemes, they were not in the top performing and today they are in top performing in their categories all three of them. What changed? What did you do differently?

First thing I want to create is a balanced portfolio. So being underweight on IT and overweight on healthcare helped me balance the defensiveness of the portfolio. We constructed a portfolio which was like a 20% earning growth and a 19 20% RO portfolio. This management was very very important. None of these portfolios the top weightage will be more than 5%. [music] And I do see you have a lot of overindex on healthcare compared to the category average across all [music] your schemes. What makes you so bullish on healthcare in India? Hospital as a sector did not do well from 2010 to 2020. It’s only at the start of co hospital as a sector started doing well. People saw a lot of near and dear ones die actually. So I think that has made people very anxious. We are more bullish on the emerging part of each sector rather than the mature part of each sector. Quickcommerce it’s in that habit formation mode. Once they see a meaningful consumer base is hooked on to that they will find their ways to monetize. These companies might look very small in the indexes now but maybe 5 year later 10 year later these will become a big part of the index actually. What’s your personal [music] portfolio like? Hi everyone, welcome to another episode of power talks. Today we have with us Aditya Kmani the fund manager for one of the top performing funds in India today invesco large and mid mid and small cap. So Aditya first of all welcome to power talks and I’ll jump directly to the point. uh when you joined these fund schemes right in November 2023 they were at 9,000 K AUM today they are at 27,000 K aum they were not in the top performing and today they are in top performing in their categories all three of them what changed what did you do differently I have to just go back into history and think what did I do actually and every I’ll maybe give you my style actually so when I look at a portfolio first thing I want to create is a balanced portfolio and when I say balance balance can be in different things like balance can be in terms of market capitalization having optimum share of large cap midcap small cap in the portfolio that is one cohort the second is having style diversity in the portfolio when I say that look there are different styles of investing one is value style of investing the other is growth style of investing and growth at a reasonable price is something in between so this is to do uh this is more for the valuation style you have and what we’ve seen in the past that as a fund manager you don’t know what style will do well whether value will do well or growth will do well. So for me it is very important to have a balanced approach having both value carp and growth in the portfolio. So that irrespective of which style does well in the market I mean you will you will do reasonably well from that uh perspective that was what that is one approach of being balanced. Um one more thing is in terms of diversification again I mean you have to be a very diversified portfolio because you know you don’t know which sector will do well at what point in time the moment you start constructing a portfolio which is very different from a sector point of view versus the index then that volatility and performance will come through so again having a diversified portfolio across different sectors. So that was the first element creating a diver balanced portfolio across these three vectors. Okay. Second part was I will say risk management was very very important like uh I’ve run portfolios in the past where the top holding has been 8 9% also and I have run in the portfolios in the past where the top holding weightage has been 2 3% also. But I think both these styles are not correct. So what I have done is from a risk management point of view none of these portfolios the top weightage will be more than 5%. So you will see the we’ve kept the top holding around that 5%. So that because as a investor as a fund manager you don’t know which stock will do well at what point in time. So the moment you start having a large weightage to one stock that starts impacting the performance in the shorter term. So risk management was one aspect and here again there are different things again how you construct the portfolio like for example again I’ll give you some examples uh like let’s take an example of something like IT sector I did not like IT at that point in time so but it is a defensive sector so then you have to replace it with something equally defensive sector so healthcare was a defensive sector so being underweight on IT and overweight on healthcare helped me balance the defensiveness of the portfolio. Again, one more example maybe I can share is I was positive on NVFC’s. NBFC as a space is more autodriven which means in case I am overweight auto and NBFC at the same time the portfolio beta will become very high. So then you take a in case you’re overweight NBFC then you become underweight auto. So that again balance the risk in the portfolio. So risk management was a very important part. Thirdly again look I mean again sectors are there are lot many sectors but then as a investor you have to top down decide which are the good themes you like in the longer term. I will not go into which are the themes uh I like and used to like at that point in time but then we decided these are the eight 10 themes we like from a longer term point of view and then with those themes in mind we started constructing a portfolio which was very bottom up. For example, suppose hospital as a space I liked a lot. Then having a allocation of 10% in hospital I decided and then see which are the suppose in a small cap portfolio which small cap hospital should I buy in a midcap portfolio which midcap hospital should I buy? In a large and midcap which are the large and midcaps small cap hospital I should buy. So according to the mandate of different funds then you do a bottoms up analysis and decide which stock you should buy to uh to play that theme. So again top down with a very bottoms up construct actually on that basis we constructed a portfolio which was high on growth and high on ROE because look ultimately in the longer term high earning growth portfolios will only be able to give high returns. So essentially we are high earning growth and high roe portfolios. So then we constructed a portfolio which was like a 20% earning growth and a 19 20% roe portfolio. But having said that valution needs to be kept in check because look if there’s no if valuation is taken away I can create a portfolio very high on earning growth and RO but then that portfolio might not be the right portfolio from a performance point of view. That’s why these are three four things I looked at and constructed a portfolio. So these are three four things we did uh uh as a house actually not just me and it’s not the portfolios I only manage the other portfolio you’ll see the performance of other funds also very good actually. So it was a similar thought process which was done across the portfolios and luckily we’ve done well over the last couple of years actually. Right. Right. No I think uh gives us a lot of clarity on you know what actually change and if I summarize it I think there are four key things you said. Uh first is the consolidation. Uh second is the allocation in terms of how much do you allocate to large mid cap large small uh large mid small cap. Third is the stock selection. uh you know the strategy of growth value investing and the fourth uh would be the sectors and the themes right so I would double click on each of them one by one sure and in fact I was going through one of your interviews and you said fund manager allocation and selection and that’s how you sort of build a good portfolio so coming to allocation first right um first let’s talk about the concentration of portfolio I think in all your three schemes um back in 2023 the top 10 funds were holding 2025 5% of the portfolio which is today increased to 40 45%. Isn’t it too risky like considering mutual funds are supposed to be diversified um why why taking bullish bets on certain concentrated uh stocks? Look again I mean what is the right concentration? I mean Sebi tells you that the maximum holding in a stock can be 10% of the portfolio. M that’s why from a risk management point of view we’ve said 10% is too high because that 10% stock does not do well it will impact our performance over the next 3 6 month even though longer term could be great actually so we’ve said that 5% is a cut off so I think 5% is is a reasonable number for a cutff to keep the concentration in check one is that secondly uh top 10 holdings top 10 holdings you rightly said were were around 25% of the portfolio that point in time right now they are at 40% % I think 10 holdings 40 percentages is not a large number because again you have to remember as a active fund manager you have to beat the index again I mean if you there’s a constant debate happening that uh will active fund managers will be able to beat the passive actually and we’ve seen that midcap has been a very difficult category over a longer time frame so that’s why as a fund manager you need to play around with the allocation actually so just to give an example I shared about hospital as a space we like hospital is I think 2% or 3% in the index h so then we constructed a portfolio which was 10% on hospitals actually so that’s where your edge comes in in terms of understanding the sector and then within that you play a basket approach don’t buy one hospital buy three four hospitals actually so I think it is not a the concentration of 10 10 holdings 40% is not a very big concentration one is that bit and secondly 50 holdings 50 holdings is a large number actually so portfolio of 15 names I think I will be able to construct a portfolio which is very well diversified that way that’s why I think I mean I’m very comfortable with the concentration and I think and that’s why over the last year one year you see I mean market has not been very great actually like everywhere there’s been landmines whichever stock you get in market stock has corrected but we’ve done very well as a house not just the scheme I manage most of the funds are at the top. So I think that is a vindication enough of that fact that even though I mean you might find 50 stock to be concentrated but we’ve kept the risk in check with the adequate concentration and also uh when I talked about the risk management framework we had not just at 5% allocation the other thing is how different sectors behave with each other understanding of that is very very important because again same example example of you know different sectors behave again for example Let’s take uh I gave you the example of auto and NBFC. Okay. Lot of these NBFCs are auto financers only. Okay. Okay. So when the auto auto as a sector is doing well, NBFC typically will do well. H because their growth will be high market will reward them. NBFC will be good. At the same time, auto will also auto sector will also do well because auto itself is doing well. So both sectors move together actually. But then we were bullish on NBFC. But then we made sure that we reduce a weightage in auto so that what if it doesn’t go right because you have to think about you have to think what can go wrong and you have to construct a portfolio accordingly not what can go right so in case suppose auto sales don’t do well I mean auto will not do well NVFC will not do well but because we are underweight one side the other side we overweight it will kind of balance the risk of the portfolio the other side u again like if we share capital market as a theme. I mean the exchanges and AMC’s and all these companies you know that when capital market does well these companies do well generally people make a lot of money consu investors are making money and when investors and a good market market was doing well investors were making money and generally good market leads to more money in the ends of people and then I mean there’s a feelood factor so a lot of people maybe can buy homes and all so real estate also as a sector can do well so both sector move together actually so We’ve taken at times we’ve taken a call we want to overweight both the sectors but we’ve been very conscious of that fact that increasing allocation on one part of the thing in both the things could lead to lot of risk uh at a later point that’s why I think portfolio construction has become very very important and look I have been in the market for 20 years if I see my journey maybe 10 years back I was just like portfolio you’re not thinking as much about portfolio construction but today I I mean stock picking is stock picking you it takes time but I think portfolio construction also takes lot of time and but I can construct a portfolio but how will that portfolio behave I don’t know like last one year what do I do I mean on bad days like for example last year election results came out one firstly the exit polls came out exit polls were very good market went up so you see your portfolio how did it how did the portfolio behave that day in a good day but then when the real result came out market tank you see your portfolio how did it do that day again when India Pakistan’s war started market came down how did the portfolio do so you have to keep testing your portfolio and one thing I’m very conscious is how does a market do how does a port my portfolio do on a bad day because in case a portfolio is doing badly on a bad day that is a big enough red flag for me that maybe I’ve constructed a portfolio which is slightly higher uh slightly risky and I don’t want to take lot of risk actually even though I’ll take risk but then it will be much more measured and calibrated that’s why I mean those things tell you that the portfolio construction have you taken care of the risk and that’s why last year was a great year for the market we as a fundhouse all of these funds did very well and this year has not been a great year still we’ve done well so I think true test that’s what we also learning actually so I mean how I will judge myself is how does the portfolio do on on a good year and how does a portfolio do in a bad year. I don’t want to be at the top in a good year and the bottom on a bad year. You have to be much more balanced that way. So, and that is a constant learning process which I’m also learning and maybe future will be much more brighter than what’s been the past. Yeah. No, I think a key takeaway for me from your style is like while there is of course alpha there’s also needs to be downside protection so that um highs are not too highs or lows are not too lows rather right and uh I think that is very critical the reason I asked about you know the concentration is because a doubt comes to my mind particularly in mid and small caps uh where if 40 45% of the portfolio is in 10 companies right wouldn’t liquidity become an issue like what’s your take on that Look again of the uh if you look at midcaps today midcaps are not very small companies. Midcap are companies market cap from 30,000 to one lakh cr. So they are large companies actually. So liquidity is not as much of a challenge in that part part of the market. Liquidity is a challenge in the micro caps. So if you take small caps, small cap is up till 30,000 cr market cap. So if we take maybe less than 10,000 per market cap, less than $1 billion market cap, I think liquidity is more challenging at that part of the market and we’ve taken a deliberate stance that we don’t want to go too much in that part of the market. That’s why if you see even small cap fund, I think small cap fund exposure to less than $1 billion company will not be more than 5 6%. So we are positioning towards the higher end of the small cap in the small cap portfolio. Midcap is anyways uh anyways quite liquid from that point of view. So I think liquidity has not been a challenge uh from that perspective across the portfolio that was one but secondly again you have to contextualize Navda like I mean you mentioned about the size of our funds each of these funds are 9,000 cr so today 27,000 cr. So these funds are not very big. So when you had it been maybe 70 80,000 to 1 lakh cr fund maybe liquidity would have been much more challenging uh at that part of the aum actually so maybe this is a this is a problem we don’t need to think right now but maybe 2 year later 3 year later as the funds become much more larger maybe we will need to also think about that point in time whether 50 stock is good enough for a midcap st a midcap portfol the other side of allocation that I have a question on Adita is the allocation to large mid and small cap companies. So as you rightly said right in the last one year the whole debate about mid and small cap being overvalued. A lot of the fund managers actually moved more towards large cap but uh all of all three of your schemes have more allocation to mid and small. So where do you stand on the over overvalued mid and small caps like what is your view? Look now the I mean we cannot run away from the fact that mid and small cap is overvalued for sure. Okay, it was overvalued one year back it is overvalued now also. Maybe that overvaluation today is is to the extent of 15 20%. But is that something I mean which bothers me if I think for the next 5 year next 10 year maybe not but in case one is an investor which is thinking whether one will make money in the next 6 month next 9 months one is not sure that’s why I think I mean valuation is slightly higher but that is manageable in my view second thing look midcap is a midcap fund so we have 85% small in midcap it has to be true to character from that view small cap is again small cap so again it has 95% small and mid but in your large and mid yeah in your large and midcap because you know that uh I need to have minimum 35% large and 35% mid so I’m running much more mid and small there I’m running 62 63% mid and small there which is quite contrary to the category so again Navda if you look at why large cap or why mid and small cap if you look at lot of new themes like I’ll just give you an example uh electronic manufacturing is a emerging theme actually Okay. So this is a new theme because of which a lot of companies have not become very large in that. Hence all companies are either small cap or midcap over there. So in case I have to play that theme I have have to play through small cap midcap. You take um hospital as a theme again. I mean till 6 month back or 3 month back there was no large cap hospital. All hospitals were large were midcap or small cap. So how do I play those hospitals in case uh I cannot play through large caps. Now in this se review two hospitals have become latchcap but I mean 2 months back there was no hospital in the latch cap space. Again you take CDMO is a emerging theme contract development and manufacturing on the farmer side. I’ll not go into detail again there only one one large cap company is there. Apart from that all are small and midcap companies. So again if I can take sector after I take sector I take auto ancillary. I mean not even one company I think one company is a large cap in auto ancillary all other companies are mid and small cap. You take real estate as a space. Today I think only two companies are large cap over there. All companies are mid and small cap. You take building products as a space all not even one companies are large cap over there. So I mean so it’s more about the sector. Yeah large cap is very restrictive. When you talk of large cap, I think maybe banking is one good sector over there. Uh where large caps has a right to win over small and midcaps. So banking is a good sector in the large cap. Second sector IT sector people if you look at some of these large cap IT companies have become very big. I mean they are like $30 billion$20 billion revenue. So their growth rate cannot be more than 8 9%. So that’s why I think large cap is a very restrictive pool to invest in and mid and small cap is where a lot of emerging companies are coming and a lot of niche companies are there which can get bigger. So that’s why and again I mean if you think about the next 6 month year you will not be able to decide whether midcap makes sense or large cap makes sense but then if you start thinking what will happen next 5 year what will happen next 10 year then you can clearly see the merit of mid and small cap over large caps in that way. Again if you go back into history maybe 10 year back because history is always a good reflection what has happened. I think last 10 year nifty has given a 12% annualized return and men small cap has given 15 16% return. I think for me the same trend will work out over the next 10 year but will that trend work out over the next one year I mean I don’t know that. So that’s why I think still mid and small cap is where you get the diversity. You get to play a lot of emerging sectors. You get to play a lot of niche businesses and that’s why earning compounding will be much higher and longer term I mean you can cannot take away the fact that stock price compounding will be similar to earning compounding. I mean over a 10ear period I mean both of them could be away by one two percentage different between them otherwise it will be broadly similar. So you have to just focus on those mid and small cap which can grow. Maybe 10 year is a long time we cannot see maybe you constru you buy a company thinking next 2 3 years and then you keep seeing what is the company doing and then so keep moving along with that. So I can so constructing 18 20% earning growth portfolio on the mid and small cap is still not that difficult. Valuations are slightly higher but still it’s okay. That’s why I am a I’m a slightly longerterm investor. That’s why I mean I don’t know that 6 month large cap will do well. I don’t take those call. I don’t want to put into businesses which are quite matured that way. So for me I mean one year back also had you asked me that question I would have said the same thing. Today also maybe my answer will be same. Got it. Got it. I think very interesting point here that it’s you’re going after the business irrespective of their cap size media small or large right and I think there are more opportunities or more businesses in mid and small cap but you know it’s often of course said right mid and small also come with a lot of risk or a lot of volatility but if I look at the last two years right both of your mid and small cap while the markets didn’t perform that well the funds did right and on that note would love to double click on your stock selection framework right how Does that work? And you mentioned growth a balance of growth and value investing. So talk more on how did you sort of select those stocks? Uh did you bake into valuations? What’s your view? There are a lot of frameworks over there. One obviously the opportunity size should be big. In case you are buying a small and midcap company, you cannot buy a company where the total market size is small because you have to visualize can the small cap company become a large cap company over a long period of time. So you have to keep an eye on the total market size that is known as uh TAM which is a total addressable market. So TA time has to be big overall. Second thing in case TAM is big then you have to see the promoter management and I mean and that’s a very subjective call actually. I mean look numbers everyone can see what is the earning growth happening for a company what is the roe of that company what is the cash flow these things have become very everyone talks about that it is so it is very natural to expect that at some point in time that promoter who’s on 55 60 65 year old he think I’ve created lot of wealth now I go into a preservation mode actually which is not right for a investor because he might have made wealth but your wealth journey is starting now because you’re putting money into that. That’s why how much hunger he has becomes very very important. He should still should he should be still passionate about the business and again Invesco as a house we are very particular about which stock we buy. So we don’t participate in every in case one sees IPOs we don’t participate in all IPOs. We have only list of 300 companies in a universe. So only we can buy within the 300 companies. So in spite of having a much lesser list much lower list we’ve been able to do well because I mean we don’t want to get into a company toasa leia mount leia and then doing a research because again look we don’t have I mean we are not like a 15 20 analyst team house we have seven eight analysts so each analyst can cover 40 50 companies so we have to prioritize that which are the companies you want to focus so a lot of things go into this and then coming up uh which stocks to buy and not to buy and we do lot of we are not the most agile house actually. So maybe each talk takes one month two month from a uh work point of view. We don’t I mean one meeting we do we don’t decide I mean we might have a view that this looks good but then we will still do a lot of work and then decide whether and over here look fund managers are just gatekeepers I mean the core of investor say the analyst has to get convinced he has to do lot of work himself and when he’s convinced he brings that stock for discussion the stock gets approved in case it doesn’t get approved no one can buy. So it’s a very long process actually. So I mean most of the analysts know what six month not six month next three month which are the stocks they’ll be working on. So they don’t uh I mean ad hoc they don’t start working on any name. It’s very focused that way. Interesting. I think this is very less talked about how the stock selection actually works within a fund house. So in fact my next question was all of this and I think it takes anywhere from 2 to four months right. So it’s quite a deep not maybe two to four months uh maybe look again we cannot uh one company can take a long time one can take a shorter time on an average 20 days is something uh we take but then there are some complicated companies takes a longer time there have been times uh maybe suppose some company hasn’t done well last 10 year so that company comes up for discussion obviously people will say So people because recency has a lot of anchoring has a lot of I mean plays on our mind actually. So then I mean we met the manument three or four times actually and it took three months actually. So and now we own a significant stake in that company and that stock is one of the best performers last one year. So it took us four months to do the work and then we ended up buying that company. So it’s not one sizefits-all. It will depend on what has been the background of the company. How is that done? Is a company complicated enough? Is there leverage on the balance sheet? A lot of things go into uh but generally 3 to four weeks is I mean I will say it takes uh to do a work on a company. Got it. Got it. Very interesting. And um you know less less talked about thing. Um coming to I think you mentioned your role as is as a gatekeeper right to bring the right sectors on the table and so that you know the analysts can go deep dive on the companies. um on sectors perspective right and one sector that you have talked a lot about in this podcast is healthcare and I do see you have a lot of overindex on healthcare compared to the category average across all your schemes what makes you so bullish on healthare in India look Nambda again if you look at health care healthare is what I mean health care is a proxy play to consumption I mean it’s like whatever a consumer spends out of his own pocket that is consumption. So healthcare is also a form of consumption. But consumption hasn’t really I would say staples and all. So that no so a person spending out of his own pocket in hospital is healthcare but then this is a non-discretionary consumption. Correct because discretionary consumption what happens? I mean loss lya market earning comes down something happens you might decide let me not buy a car for next one year let me not buy a TV. So it’s very I mean discretionary discretionary which makes it very cyclical but in the case of healthcare I mean you it’s non-discretionary I mean it is complete so that’s why it’s a good way to play consumption pseudo consumption in my view one is that secondly look hospital as a sector did not do well from 2010 to 2020 last decade it’s only at the start of covid hospital as a sector started doing well. So again I think nowadays during co people realize people saw a lot of near and dear ones die actually. So I think that has made people very anxious I think I will say I think and so now I mean you can see most people they go on Google what is the symptom and everything so that’s why that anxiety is very high. So now I think people have realized that they don’t want to take a chance with their health. So be you will want to go to the best hospital. Earlier what happens I mean you were not able to go to the best hospital from an affordability point of view. One nowadays the way health insurance is being sold last four five years a lot of people have lot of cover on the health insurance side. So koda they want to go to the best hospital I mean because you know they know that it’s not out of pocket spend. So that’s why that is leading to these corporate hospitals doing very very well. These are two three reason. Other reason is I mean again per capita with India with increasing per capita income healthcare will be the biggest beneficiary actually because what happens in case but he has money I mean he will something happens he will show to a doctor. So as in when people get richer I mean they will make sure that they get the test done everything done. So again one more reason I can share I mean you life expectancy has been moving up today I think people I don’t know the statistic over here but I’m sure that last 10 year life expectancy has moved up today it will be more than average could be around 75 76 years and who are the people who get hospitalized mainly it’s not that I’m not saying young people don’t get hospitalized but the major cohort will happen people more than 60 65 years old and in that cohort that population is moving up with that moving up healthare spends will move up actually that’s why I think healthcare is one of the best sector to invest money from a longerterm point of view and within healthcare again the healthcare is a very heterogeneous sector actually I mean because when you say healthare I mean people understand healthare is company any medicine company I will not name companies it’s a medicine company but if you see our portfolio we are not quite bullish on the on the pharmacy part on the on the medicine part of it, pharmaceutical products part of it. We are more bullish on the services part. So we are more bullish on the hospitals piece. We are more bullish on the CDMO piece which is a contract development companies which do uh research work and manufacturing point global innovator companies. So we are more bullish. So out of that 20 21% exposure we have across our portfolios pharmacy pharmaceutical products will be only 3 4%. 17 18% is the services part of it. So that’s why we are bullish. So again one thing of the I mean we have to evolve as investors. So again one thing which has gone right for us is we’ve not looked as a sector just the way it looks like like consumption if you look at consumption again consumption can be broken up into the uh FMCG companies the old FMCG companies it can be broken up new sector like quickcommerce and all these sectors so [clears throat] we are more bullish on the emerging areas of that sector rather than the uh the matured part of that consumption within healthcare we are more bullish on the emerging areas like hospitals and CDMO within financial within financials again BFSI is a big big sector in our portfolios so when you talk of BFSI financials people think bank NBFC but if you see our portfolio we are more bullish on the non- lending piece which is uh which is the uh capital marketplace like exchanges are there asset management companies are there wealth management companies are there brokers are there also insurance pieces is there, general insurance is there, life insurance is there. So we are more bullish on the non- lending part of financials in our portfolio. So that just to sum it up, we are more bullish on the emerging part of each sector rather than the matured part of each sector. So we are taking a much more evolved view on those sectors rather than the way it has been a very traditional way of looking at these sectors. Yeah, Adita, as you were talking about new age companies being like a key focus in your themes, right? I saw that you have also invested in Swiggy and Zomato which is unlike a lot of other traditional investors. So what’s your view on these new age companies? How do you value them? Uh now that I’ll not go into specific into names but maybe I’ll cover the entire uh the theme broad theme we are playing there. So look for public market investors like us uh maybe we are still learning I mean the first company I will not say the first company Zomato got listed maybe what I think 2021 so at that point in time we are trying to understand is value so now four year into the journey we’ve tried to understood some bit of it how to value it but still that learning is not precise I would say but then again you go back maybe India is 30 40 years behind You look at a lot of these platform companies, they have become really really big. You look at Amazon, I mean how it has become so big over a period of time. That’s why I think you cannot keep a closed uh mind to all of these companies because these companies might look very small in the indexes that now but maybe 5 year later, 10 year later these will become a big part of the index actually. So that’s why our approach has been this over here. Secondly again these are platform companies. I mean people say that quick commerce these companies are burning so much of money. You have to again understand the because as I we covered up on the TAM the total addressable market has to be uh I don’t remember the exact numbers but if we look at quickcommerce I think quickcommerce today will be a $10 billion kind of a GMV gross merchandise value which is a total sales around $10 billion. uh online will be I think around hundred billion dollar grocery retail will be I think 600700 million billion dollar so in that 600 700 billion right now these guys are only $10 billion so that they are very small I’m not saying that they will be able to take all of it because look quick as a model is very convenience-driven it works in a densely populated metros maybe in a tier 2 tier three it might not be that successful but still I mean that number is really really large and over a period of time we’ve seen as consumer I mean once you get to the convenience aspect then you don’t want to I mean your habits are spoiled actually I mean till 3 years back we thought dust minute I mean do we need that but nowadays I’m sure everyone especially on the urban side uh the affluent class I mean everyone uses some of these platforms very often actually so that’s why I think they have become very relevant in consumers life. So the moment you become very relevant and useful, I mean they will find ways to monetize that in the future because again future I mean I also don’t know whether these quick commerce companies will make money in the next four quarter or next eight quarter but again if you go back into history I mean some of these companies started from a food delivery business uh 10 years back there were I think more than 10 platforms on the food delivery side. So the similar question at that point in time was that will these guys make money? I mean these guys are making burning so much of money. But now we see it’s become a dual pulley market. One guy controls a 60% the other guy controls a 40%. And today we don’t I mean we want to order something we don’t 10 rupees platform charge in case someone puts that is not a decider whether we order or not order actually. So that’s why now they are in that monetization mode in that part of the business. But again quickcommerce they it’s in that habit formation mode. You and I are getting into that habit and once they see a meaningful consumer base is hooked on to that they will find their ways to monetize over a period of time. So that’s why I’m sure that they will make money how much money they’re still understanding I mean we’ll get to know over time period. So that’s the entire approach over here. Coming on the valution bit again of the I mean we tried ahead uh in different metrics but it is very difficult to value it precisely actually I mean valuation could be off by 20 30% I think versus I mean where it could be trading so that way valuation is more difficult over here but uh you have to keep an eye over here you cannot say that I bought this I like this good dasal cho types you have to keep evolving you have to keep monitoring 3 months it’s every 3 months what’s happening in that space is the competition moving up is the unit economics coming into place have they been able to be successful on the tier 2 market so there are a lot of variables we need to keep tracking so I will say you need to be very agile over here very alert over here because I will say I talked about the risk aspect this is one part of the portfolio where I think I have some risk sitting in the portfolio. So I have to be very careful uh from that view how I take it forward. But on an overall basis and again look this is a channel as I said traditional versus emerging traditional companies I mean population growth rate is what now 1%. I mean they cannot grow beyond a large number but this is like disrupting the normal channel of consumption and you disrupt I mean you’re not taking market share from others you’re just taking market from from general trade and all so that’s why it looks like but at some point in time I think valuation may run ahead of reality so we need to watch on it on an aggregate bas so there’s no precise answer to that we are still learning over there right so uh I think taking a step back here Adita from the stocks and the themes to a macro India growth story right and I think on this also there’s been like a conflicted debate I would say when I uh talk to CEOs right of course I have a lot of belief in you know this next decade is India’s decade but the other side and you know again there are veterans saying that it’s also being a little overrated and in light of you know AI like India not riding the AI wave what’s [snorts] your view on the India’s growth story in the next five to 10 years. Look again Navda if you look at the economy again I as I said I’ve been in the market from 2005 I mean economy today has been the best it has been over the last 20 years because you look at most of the macro indicators I mean the BOP is very much in control inflation I mean government has done a wonderful job in terms of uh reducing the inflation in the economy I mean if you look at forex foreign reserve is very high so everything all macro indicators are very good at this juncture. Only thing is yes growth has been slightly low over the last one year but that is any economy goes through those cyclical slowdown. So I’m sure the next 2 three four quarter you will see some pickup uh on the on the growth rate side. So on an overall basis I will say that economy looks very very good. If you look at in China is something we usually compare ourself to like China is a country maybe 20 years ahead of us. Okay, US is a country which is 40 years ahead of us. So there’s no point in comparing India today’s India to today’s China and today’s US and getting disappointed that India maybe India is not spending so much money on R&D maybe deepse has happened in China India where is India on the AI curve look every country has a life cycle actually everything each country can import and export but I think people at scale no country can import or export so India has that vast I mean you look at the media demographic is something you would have heard is the key thing. So demograph is what 29 years I think US is 40 years China is 40 years those are aged economy and when an economy becomes that old I mean you will never be able to grow at a fast rate because a 50y old person consumption pattern is not same like a 30-year consumption pattern people take FI26P and FI27P and then come up stock because most of the value decides in the years ahead. That is not to say that uh next year P doesn’t make sense. I’m just saying that simplistically we cannot just see next one year P and next 2 year P and come to a uh decision that is stock is expensive or cheap because you have to see that time and lot of the other things. So that’s why we at Invesco we don’t look at short term what is going to happen. That’s why some of the themes we’ve identified and it’s not that we’ve identified that theme that theme is known to everyone is that just that the conviction in those theme that R and is slightly higher that’s why irrespect of the volatility some company going through ups and downs we’ve I mean been in those themes and allocated a large part of our portfolio so that’s the overall take uh I will say only thing is um I mean economy doing well and market doing well maybe over a longer time frame it will be perfectly correlated But then you have to see that last 10 year lot of people would say that midcare 15 16% next 10 year only thing is to keep in mind maybe as a country our inflation has come down maybe used to be a 6% plus inflation economy today we are like a 4% inflation economy and when that happens the sales growth of the companies come down because sales growth is linked to the inflation and when sales growth come down profit growth typically also comes on in case they don’t exercise their pricing power. So that’s why I mean going ahead I think mentally you have to think stock price compounding at 12 13 14% is good enough. It’s similar to what a 16 17% compounding has done over the last 10 years because ultimately what matters is the purchasing I mean whether they’ll be able to buy the same amount of goods with that money the answer will be yes even in that 12 13 14% that’s why I mean we remain quite uh I mean look as Indians we don’t have an option also and we’ve not seen other economies that much but still the overall construct looks good on an aggregate I would say. Got it. Got it. I think you said a very powerful line key. You can import export everything but you can’t import export bulk of people and that is where you know India is at that sweet spot. Um the reason I asked this question because my uh viewpoint is just that um you know US grew or like so a lot of alpha sort of got generated because of the tech boom in in the west right and now there’s another sort of moment where you know potentially we could have captured that alpha uh or US will continue to grow at that rate because you know it has sort of unlocked another tech lever and that is where uh you know there’s always this curiosity that you know when will India you know go ahead in the tech case because ultimately I feel I mean more more like a personal opinion but I feel like tech will ultimately dominate there’s consumption but there’s tech that sort of enables and creates leverage what’s your view no you’re right that tech will tech will at some point in time and these are when you talk about US these are not just US companies Google meta these are I mean multinational they operate global GDP is their play actually I don’t know I mean how long India will take to produce a country I mean of that scale I think recently Zoha came into prominence. The government said all this should happen to that. Again as I said nava this is a evolution of a country actually and maybe 10 years later we might we might have a Indian tech company which is global in scale actually. So that’s why I mean look ultimately you need money to create that tech. You have to you have seen that meta how much money is put into AI. Can any of the Indian IT services company put that? They don’t have the balance sheet that much money. So first they will earn that money and at some point in time they will pivot because ultimately India is a $2,500 GDP country. You cannot compare to company which operate in $1 GDP country. So that’s why I think we should not get disappointed comparing India to China or UN. We should perfectly understand India is 20 30 years behind these countries and in case the government is able to provide a good path maybe I mean we will be able to unfold and become much larger not just much larger I mean much more tech focused country uh in future because I mean you look at I mean most of these tech people in US and other countries a lot of the CEO are Indians actually yes so it’s not that that India cannot do that I mean it’s just that India has to have that environment A lot of these people who pass out, they are able to I mean work for Indian companies rather than a lot of these MNC’s actually yeah the ecosystem needs to evolve right and on that point I would love to ask what’s your personal portfolio like how much are you invested in the India growth look I’ve been a completely equities guy Navda but u in case I have to uh go into hindsight maybe I’ve not done a very good job with my personal portfolio because look what happens as fund managers as analyst I mean a lot of companies we meet and the companies we like we end up buying in the portfolio so that way there’s a conflict actually what you buy in your personal portfolio that’s why I think last stock I would have bought four years or 5 years back so that’s why but so incrementally what I’ve done is most of the money what I want to put in the market goes into mutual fund only and mainly through my own funds only because that is the easiest thing and I mean I haven’t seen that but I’m sure my personal portfolio would have underperformed uh my the mutual funds I’m managing. So that goes to show that I mean personal investing is not easy actually. So because you have to be on the job all the time actually. So I think that’s why mutual fund I’m very very bullish. That’s why AMC as a business actually I have it across portfolios because I mean right now I’m maybe I’m going to a different unrelated topic but still people will and even platform like you guys you are guys also part of that uh boom or revolution which will happen in future right now also equity is what 3540 lakh cr I don’t remember the exact demat exact m unique mutual fund investors I think but there’ll be not more than 6 7 8 crore investor so that number is very very small actually. So that’s why and mutual fund is a very powerful tool actually and I think that’s why most people who trade will ultimately realize that mutual fund is the best because also what happens when you do your own this thing you tend to construct a five stock 10 stock you tend to nalia so your portfolio will not be more than 10 15 20 stock which means there’s no proper diversification actually so that’s why I think mutual fund is the best vehicle for any investor including me to put your own money to use actually and uh because you manage it yourself. I mean you know I mean it better to like understand this. Yeah. Yeah. No fair and and given that you know of course you you are allocated more to mutual funds. Is there certain um allocation across large midcap and small cap that you follow? Look again I mean you would have by now you would have known that I’m a hardcore mid and small cap guy. So for me mid, small and large and midcap and I’m lucky actually. I mean the categories I like actually I’m managing those categories or maybe because I’m managing I’ve started liking the category it can be the other way around also but longer term I think these are the best categories even multicap is a good category flexi cap in case it’s managed with a good share of mid and small cap is a good category so anything any any I think 50 60 again this is not a generic answer uh that is on my risk capetite and those thing investor having a lower risk appetite that might not not be correct actually because mid and small cap go through their shares of volatility but again if you’re thinking long-term I think this is where I mean I’ll end up making much higher money than the other categories. Got it. Got it. So primarily in equities and you know via mutual funds mid and small. Do you also invest in debt or you know the talk of the town gold and silver? Not much. H got it. Uh perfect. So I think last question Adita um our audience for context is 30 [clears throat] 35 year old person who is on their wealth like on their journey to wealth creation. Um what’s your advice to a 30-year-old out there? Um you know how should he or she go about investing for their ultimate goal of financial freedom? No what happens a 30 year I mean I’ll go back when I was 30 maybe that point in time I used to have very little surplus income. Then one used to think that I mean you were not able to see will that become a big booty at some point in time. So I think habit formation is more important actually the moment you start putting money and the moment you start seeing returns coming through ultimately you’ll I mean try to spend less and then uh maybe put more money into mutual funds or whatever. So I think getting understanding that habit is very very important and again I mean lot of people last four five years who come in the market I mean they they’ve seen the market the way it has behaved 20 to 24 and they think every year could be like that but the every year is not going to be like that you have to understand equity is a long-term tool actually so there’s no shortcut over here so there are times when 3 4 years market could be bad good 2 years market not might not be great actually but then people should keep their faith in equity because longer term I mean you it will give you a 13 14% compounding over a long period of time and I mean so suppose two year doesn’t do well maybe a third year and it will make up for that so whenever times are bad when market is not doing well people should actually put start putting more money into equities actually so I think that ultimately will lead to and you don’t need to double every year to make lot of money I mean people should understand even a 15% compounding over the next 10 year becomes four times your money. So in case you put in 15 rupees today uh uh 100 rupees today with a 15% compounding it will become 400 rupees in 10 years time. So that point in time it will look like that’s why it is a very very long-term thing actually. So people should not take shortcuts over here. Try to put as much because there’s nothing better than financial independence actually. I think so that’s the most important thing I think most in I mean people who are professionals they wait for that day when uh they become prof uh financial independent actually so I think you have to become very wise with your money so these are the two three things I can share maybe no fair and I think um uh it’s in this world of instant gratification right compounding is one thing you’re not able to imagine um as easy right that it does get four time even at a 15% rate in 10 years. Uh so I think that is an important reminder and the perfect note to end this podcast on Aditya. Thank you so much for taking out the time. I had so much of learnings in this podcast. Thank you so much. Thank you so much Navda.