Helios Flexi Cap Fund Category Leading Performance Dinshaw Irani

TITLE: Helios Flexi Cap Fund: Category-Leading Performance | The Spotlight x Dinshaw Irani | Krish Kothari CHANNEL: Krish Kothari DATE: 2025-11 ---TRANSCRIPT--- This is a mind-blowing number. Uh because it’s both China and US put together. Uh the per capita consumption of every single Indian is 37 GB per month which is like roughly watching probably what two Hindi movies a day literally uh slightly more probably but the fact is that that’s a kind of data we consume. October was the first month when he bought Reliance uh in that particular month because in their AGM they announced that they’re going to uh deemerge the telecom business.

When I look at the holdings of the flexi cap fund today, what does it tell me the investor about how Helios is thinking about the market as a whole?

And we said look we can’t be this straight jacketed. We have to be more aggressive in our flexi cap. And uh you’ve seen that right in our case we’ve gone as low as I think 47% in the large cap space and as high as probably 70 odd% in the large cap space. So and by the way the timing has been perfect. I mean we if you had looked at our portfolio sometime in uh September uh sorry October it was 70% large caps right of last year I’m talking and today uh it was 46% in September end and I think October end was close to 50 so that’s how it has been uh so we’ve been very flexible in our approach our stance of staying away from PSUs not because uh of anything else but the fact that uh they are not consumerf facing banks they’re more of capex related banks right I mean they partake in infra spends and stuff like that yeah our call on BFSI has been purely that consumption will pick up and obviously you need to get into the space where you believe uh is going to aid this consumption so obviously uh you know the NBFC’s and the financial services and the wealth managers or the gatekeepers to wealth if you call them the the exchanges and stuff like that. I think this is the space you want to be according to ICRA which is uh which ranks all these other flexi caps I think 40 odd are there in the market today uh 40 plus we are number three in that right and that performance came not because we holding a Reliance or a Infosys or a TCS or a lever or an SLA nothing of that sort it was all depending on our view of the market in fact my top 10 holdings uh were very varied. I mean there were there were a couple of small caps in my top 10 holdings which I don’t see normally you see in a in other flexi caps.

Darani thank you so much for coming back to our channel.

Kish thanks a ton for having me on your show again. Rather than talking about investing generally, which we’ve done in the past, I want to actually focus on one specific product from the Helios stable, which is the Helios Flexi Cap Fund, your flagship fund that you launched, I think pretty much exactly 2 years ago. My hope with this conversation is that anybody listening not only gets a good sense of how you and the team at Helios think about investing generally but more importantly get a very good understanding of what it is they’re buying when they invest in this fund and I should add just as a disclaimer that I my clients my family were investors in this fund so I mean to that extent whatever bias we may have but just you know just as a as a sort of form of disclaimer I want to put that out. But so am I a big uh investor in my own fund. So no issues. I’m totally biased.

Exactly.

But always always good to hear that when you’re investing in a fund that the the that the man behind behind the scenes actually invested as well. Um but then sure let’s let’s begin with a slightly more macro perspective on the fund and how it’s positioned. Now the good thing of a mutual fund is I don’t have to guess what you like. I can just see your monthly fact sheet. But when I look at the holdings of the flexi cap fund today, what should be my what what does it tell me the investor about how Helios is thinking about the market as a whole?

So okayish let me go back to the whole concept of why we came up with a flexi cap in the first place. So what we realized was that so there was I mean we were in two minds. Initially we wanted to rather do a multicap or a flexi cap. Then we finally took a call only on flexi cap because we realized that gives a lot of leeway to the manager to play to his strength. If he likes midcaps, he can be loading up on midcaps without having to worry about that 25% cap and stuff or rather 25% minimum. He doesn’t like it, he can reduce it below 25. Same on the case with small and midcap, right? So his preferences work perfect, right? So that was the whole logic. And then we went back and we looked at our fund the flagship that we’ve been running strategic the long leg of our fund and we realized it was totally a flexi cap. We were very agnostic to market caps and we were taking calls depending on the view on the market if the market was looking uh topish or bearish. We would be uh going heavy on the large caps and if it was looking fairly bullish or on a buo node we would top up that particular portfolio mid and small cap. Right? So basically play the beta as you feel the markets are going to move right. So that’s what the whole logic was and we said no we’ll go with the flexi. Yeah. Now what we did realize when we were launching off we said the actual flexes available in the market were they were mainly 70% large gaps right and that’s it probably the flexibility was you want to be 65 large or you want to be 75 large. Uh that was what the flexibility was all about. And we said look we can’t be this straight jacketed. We have to be more aggressive in our flexi cap. And uh you’ve seen that right in our case we’ve gone as low as I think 47% in the large cap space and as high as probably 70 odd% in the large cap space. So and by the way the timing has been perfect. I mean we if you had looked at our portfolio sometime in uh September uh sorry October it was 70% large caps right of last year I’m talking and today uh it was 46% in September end and I think October end was close to 50 so that’s how it has been uh so we’ve been very flexible in our approach secondly what we did was we said look the common holdings across most of these flexi caps If you look at the top 10, probably seven were repeating across, right? We said we don’t want to do this. I mean, we don’t want to be chasing the index. We don’t know. By the way, if you ask me today what is the composition of the NEC 500 index, I won’t even know cuz we don’t I mean composition as in the weight uh of the various sectors within that particular index because we don’t care. We go with our view on the sector. So, we take binary calls. If you like the sector, we’ll load up on that sector irrespective of what the weight is there in that index. If you don’t like a sector, it’ll be zero. So that’s what we did here. Again, I mean, we didn’t like it. So, it was zero.

By the way, the performance that you see today, uh, you just mentioned that we’ve been around for two years. So for the last two years according to IKRA which is uh which ranks all these other flexi caps I think 40 odd are there in the market today uh 40 plus we are number three in that right and that performance came not because we are holding a Reliance or a Infosys or a TCS or a lever or an SLA nothing of that sort it was all depending on our view of the market in fact My top 10 holdings uh were very varied. I mean there were there were a couple of small caps in my top 10 holdings which I don’t see normally you see in a in other flexi caps. And by the way this is a big one right? We’re talking about a 5,000 cr corus. We not talking about a small corpus where I can play around with this money as such. So that’s I think what is what uh gave us that edge across and I think that’s what and you’ll see that I mean you will not see us chasing saying that oh look I don’t like it so maybe I will in the weight say say it’s like 12 13% in 500 probably I’ll be underweight IT by keeping it at 8 9%. That won’t that’s not going to happen. If you don’t like it it’s going to be zero. So that way

and I think that that’ll keep showing up in our performance as such. So

for anyone watching in case they’re wondering the fund depending on which plan as in whether you bought direct or regular over these two years I think it’s up 24 to 25% compounded for these two years. So, so like you said, it’s I mean I don’t know maybe I’m sure technically there’s somebody who’s done better but broadly speaking sort of you know um category leading performance and let’s try and you know I want to understand what is it that has led to that performance and naturally it’s both what you’ve bought and just as importantly what you’ve stayed away from that’s allowed you to do well as a fund. First sector that I want to discuss with you which I think is quite an important sector at the moment and generally as well is the auto sector where you have four companies. Now what is interesting is that if I’m not mistaken all your auto sector allocation as far as the OEMs is concerned is to two-heer companies. I I if I’m not mistaken there’s no four-wheeler company, no truck company, none of that. Can you explain that thought process and why you’ve stayed away from most of them but focus on these very specific companies?

If you remember our initial dialogues that we had, we were very clear that uh we are very negative on the auto space mainly because of the competition they’re going to face from the EV onslaught, right? Which is electric vehicles onslaught.

Same product but two different platforms, right? And the IC guys will not even realize what has hit them because uh EV IC is internal combustion engines and EVs electric vehicles, right? The EVs are normally a iPad with four wheels, hardly any moving parts, couple of scores of moving parts while you have 2,000 and 3,000 moving parts in the IC guys. So lot of servicing required, no servicing required and there’s no aftersale service as much as there’s need and IC. So it was a different ball game alto together and unlike the IC space which is controlled in India by probably around four or five major players I EVs was a massive play globally there are 150 odd players uh in India there again if the competition is allowed you’ll see a lot of players coming in but yeah so that was the whole reason why we were very clear that we will not enter the EV I mean the auto space having said that the two-wheeler guys however ever what they did manage to do and they by the way they suffered a lot right from 1819 onwards all the growth was taken away by EV players in fact their market uh share loss was quite phenomenal for the IC guys right uh and as a result they found their way out they finally did manage to uh come up with products which were pretty exciting pretty decent and anyway the EV onslaught stopped as such and obviously they a couple of winners with an EV, right? Uh so that’s what made us look up the two-heer space and then we realized that look in the two-heer space uh with the GST cuts coming in by the so this four stocks weren’t there from the beginning. These four stocks came only after August uh when the PM announced on 15th of August that uh there’s going to be a rationalization in GST and I’m going to give away Diwali gift and obviously what we realized was that one of the longstanding uh arguments of two-heer players are that this is a essential product you can’t be taxing it at 28% GST as such. So we said okay this is going to come off right. uh in fact what we didn’t build in was that even the s is going to be taken away that was a big one I mean the s being taken away from certain engine sizes and stuff like that was a very big one so anyway we said okay so this has got to come off now let’s start looking at the guys who are which we believe are the future winners right so we came up with two names in the in the IC space uh they were also getting into EVs they’ve done a good job in EVs which is one is hero and the other one was bay auto and then We came up with two EV names which we felt were going to be good. In fact, the first name that we came up with Ether Energy so that we bought at some sub 300 rupees and that phenomenally well right and the second name we came up with in EV much later was probably Ola as such. So that’s what we did and I think it’s done phenomenally well for us as such. all these four uh players you will not see any any four-wheel plays or PVs passenger vehicles making it to our portfolio neither you will see any CV guys because I think even today they are very protected uh in terms of international competition once that comes through I don’t think there’s any chance of s oil in fact uh one of the data points that I keep sharing with is one of the big EV players in India I won’t take the name you can open the balance sheet and see it He spends roughly around say 300 or million dollars on R&D annually. Uh he comes up with these 12 13 platforms in a year for EVs and stuff like that. And you look at a BYD he spends close to $8 billion on R&D every year or a Tesla for that matter which spends close to $5 billion in R&D. Now where is the competition here? Right? you I think you’re just copying and you’re just trying to show it as by the way out of that 300 million R&D 200 million is on capex so I don’t know what R&D is being done on $100 million but that’s how it is yeah so anyway so we’ll leave it here so we we’re not too keen on getting into the PV

you know the GSC cuts that you mentioned that happened in August do you think that and this is again now not focused just on the um uh you know auto space but more generally consumption do you think it signals that the government is now just as focused if not more focused on consumption versus say investment in the economy.

Yeah. So actually uh kish if you remember the the feeb budget the first fb budget

I think that was the first salvo from the government they were very clear that look I’ve done enough

on the capeex front I can’t do any more I will keep my capeex fixed uh but I will give an incentive to consumers I’ll give an incentive to uh corporates to get jobs in because ultimately when you get the jobs in that’s when you get consumption going right and uh so that’s what they did from that budget itself well the GST was I think uh in so many I won’t I won’t mince around words but I think it was forced upon us because the way the consumption had tanked and it had tanked from September last year on I mean if you remember the September was the not September rather from the beginning of last calendar year is when you saw a decline in earnings of corporates and stuff like that and September was the final straw on the back of the camel I suppose with when we reported negative earnings uh for that particular quarter. I think that’s what drove the government to realize that look, we have to focus on domestic consumption because exports can only get you that much. CPEX can only get you that much, right? You have to get the internal consumption going. And you’ve seen that story playing out in China. I mean, when the consumption really kicked in in 2005 and six, that’s when the hockey stick curve took off for their economy as such. And they’ve done phenomenally well since then, right? So I think domestically also we with a consumer base of 350 400 million n consumers though we are a population of literally one and a half billion but actual consumer base is 350 to 400 million give or take a couple of million here and there I think this is what uh and by the way it’s not a small base at all I mean we more than the population of US in terms of consumers right or for that matter the whole of EU put together we more than that right so it’s a huge base and I think the realize that you got to push this space and no better time than now. Uh because uh I mean if you give me some few more minutes I’ll tell you my views on consumption.

Yeah please. So, so basically uh the fact is that if you look at the labor base today in India fortunately only 29% give or take a couple of fractions here and there composes of premillion consume I mean labor premillion why I’m saying premillion I mean ones born before 80s is because we were bought up on a staple diet of uh don’t spend beyond your meat means and saving is the right way to go and stuff like that. I don’t think you need that in this kind of a environment today. You need to spend, you need to borrow, you need to leverage and stuff like and fortunately the rest of the 71% is either millennials or the generation Z. I think that is what uh you need aggressive spending and not overleveraging obviously but aggressive spending is what you need and I think this is the way forward for this country per se and I don’t have any doubts that GST is the first form of moving it and by the way even in that budget last year I mean in fair they had upped the cuts in uh the taxes right from seven lakhs to 12 lakhs slab they had moved so that also was a big uh offer for the consumer as such and by the RBI has done a phenomenal job by increasing liquidity or uh cutting interest rates or making it making liquidity at affordable prices is what they’ve done. So, so I think it’s a perfect move.

Another sector where you have I mean clearly you all are happy with that sector is telecom as is the case with most people who are bullish on this. There’s basically two companies they’re bullish on and generally not so not so keen on the third one. So now if you ignore the one that’s maybe having some troubles if you look at the two larger companies is the underlying crux of the matter simply that over the next 5 10 15 years it is inevitable that our pools just have to expand. Is that in a very crude sense the entire thesis behind that sector? So I think uh the the fact is that this is these are the two come not two okay whatever telecom is the space which is going to provide you connectivity also right be it on just on purely on your voice connectivity video connectivity or even IoT internet of things because ultimately things are going to move that way right even if you talk about AI these guys are the ones who are going to give you that connectivity in the AI bit right if you want to talk to your robo you have to have some way of doing it, right? So that’s what’s going to happen. Anyway, I’m just extrapolating things. But the fact is that these are the guys in the right place at the right time in technology wise, I think India is far more advanced than you see in other western countries. Though we obviously China is a different ballgame altogether, but the way we’ve gone about our payment systems and all all again aided by telecom, right? the connectivity which matters by the way India consumes and this is a mind-blowing number uh because it’s both China and US put together uh the per capita consumption of every single Indian is 37 GB per month which is like roughly watching probably what two Hindi movies a day literally uh slightly more probably but the fact is that that’s a kind of data we consume as a as a as a whole, right? So that itself shows you that how adapt we are at such things, right? And obviously ARPO growth has to kick in because being such huge consumers of data, ultimately you pay for it, right? And I think most of the telecom players have realized that look, this is not you’re not subsidizing for no reason. We’ve already got the market shares we wanted from here on let’s live and let live, right? So that’s what’s going to happen. uh the third player whom you talked about will survive for some time but ultimately he has to I don’t know I mean some new player has to come in to bail him out or maybe get merged with the other two who knows what the government’s intent is because ultimately it’s a government company now with 49% ownership per se so that way and that’s what’s exciting about this sector and that’s why by the way if you notice October was the first month when he bought Reliance uh in that particular month because in their AGM they announced that they’re going to deemerge the telecom business per se and I think this is what we are looking for in Reliance that there’s a value unlocking happening when you do a summer part the telecom business itself was like roughly around 2/3 of the EV of the uh of the company at that point in time

back to the fund composition there’s as is sort of inevitably the case the financial services if I think of it broadly is the largest weight in the um in the portfolio But what I found interesting is when you break down the components, there’s two things that I wanted to discuss with you. The first is this idea and and you know I’m really interested in how you think about this. The idea that if you look at them specifically as investments, forget how they are as companies for a minute, but if you look at them specifically as investments, are PSU banks actually more attractive as investments than uh uh private banks at the moment? just on you know certain elementary logic of starting valuations maybe the cleanup has already occurred so therefore that sort of you know change is more in the on the public side but where do you stand on that debate

so kish our our stance of staying away from PSUs is not because uh of anything else but the fact that uh they are not consumerf facing banks they’re more of capeex related banks right I mean they partake in infra spends and stuff like that. Yeah, our call on BFSI has been purely that consumption will pick up and obviously you need to get into the space where you believe uh is going to aid this consumption. So obviously uh you know the NBFC’s and the uh financial services and the wealth managers or the gatekeepers to wealth if you call them the the exchanges and stuff like that. I think this is the space you want to be in and even the banks that we have private sector mainly but all these banks the private sector banks are more of consumerf facing banks right or for that matter uh taking care of working capital of companies and stuff like that they’re not into the fixed asset model of investing into say capexes and stuff like that yeah so that is the first thing the only PSU by the way bank that we have is SBI uh public sector bank that we have is SBI And that’s mainly because it’s more of a consumer bank than actually a a fixed uh capeex kind of a bank. Right? So that is why we like SBI. And one more thing about PSUs is that the problem with public sector banks is that uh the book value looks cheap on the face of it but you never know what the underlying uh assets are like. Yeah. So there may be some questions there or whether they’re going to come back or no. So so that’s why we very very conservative in our approach. In fact uh even the case of NBFCs which we picked up initially we very clear that the worst of times which are the ones which really uh didn’t have much of impact on the book and that’s how we started identifying those names and co was a perfect period to identify those names of who who held on to their books who was the bigger writeoffs and stuff like that. So I think that helped a lot in our own whole

is housing finance something that is of particular interest to you. Yeah actually so we have a couple of names there also in housing finance in fact more in the affordable housing finance than actually the high-end housing finance where the ticket sizes are much lower and our belief is the same here that when the per capita move up normally the consumer first thing he looks at is a better house right rather than a new car so I think that’s where things will go as such and probably he’ll move from there as such tricky down to the other needs for the consumer. So that’s why we are heavy on the housing finance companies.

When it comes to housing and this is not just housing finance, just housing generally don’t is it not the case that the better play presumably is actually catering to the very highest end. I mean I I feel like if you if you sell try and sell a one cr flat it’s hard but if you want to sell a 100 cr flat you can’t keep it long enough. So, so I mean how how do you how do you profit how as a as a public markets investor as a fund how do you position yourself for that?

Yeah, actually you know the same thing is playing out in the US now because the high-end houses are being lapped up by the low-end ones are like lying idle as such. Yeah. So it’s the same as the case out here. So what we did was we basically went with only one real estate guy. He said, “Look, this guy’s into this high premium homes and he’s in the NCR region, mainly considered in the NCR region, and that’s where the real money is, the big money is.” So, we said, “Let’s go with this guy.” Right? So, and and fortunately, uh it’s worked well because and by the way, one more thing we saw was the land bank that he had, which areas was he in, has he overpaid for those land banks and stuff like that. And obviously, the fact that how are his cash flows? Is he is he borrowing to get him? So all that thing we worked out and we took just one player be comfortable with that and that’s how we played that uh portion per se but as I said the affordable housing bit is not in tier one cities right it’s across tier two and three mainly tier lower tier two and more of tier three right so that’s why these housing finance companies that we have are mainly in these segments you won’t find them in a Bombay funding houses or Delhi funding houses and stuff like be in the smaller towns of Patiala and whatever and stuff like that.

other sector which I think is I mean I was it’s in a very interesting sector at the moment for a number of reasons is power energy sort of however you want to think about it and so you obviously have power companies itself as direct players but even when I was looking at some of the capital goods companies that you own they are you know indirectly involved in that you know entire power value chain is are you as the house taking a call on power consumption driven by AI or anything like that or is it just a basic call on supply demand in the economy and therefore it’s a space that generally has seen insufficient investment and just in that catch up there’s an opportunity how do you look at that space

so the thing is AI I don’t think it’s going to work out right now I mean at least in India at least it’s not going to work out so anyone taking a bet on AI in India is going to burn his hands out is too far into the uh future as such even to make sense as of now. So that’s out for us. So the utility guys that we own are mainly the uh guys who supply power right that’s one or those who are funding that KP right second was that and the third one is which you mentioned capital goods again we are in the transmission chain rather than anything else out there because uh and by the way power as you know is a very controlled uh sector per se you have to be very careful of what you pick out there I think we got only one name uh in that particular space in the utility space at least uh they’re supplying uh and obviously in the in the capeex bit as I said the value chain which is least impacted because of government interventions and stuff like that I think that’s where we are in the transmission space and that also uh two big guys who are MNC’s uh and one of them in fact is uh uh holding a pattern for a particular process which is uh which nobody else has so if you notice is that most of the new contracts for transmission goes to that particular uh company per se and they’ve done a phenomenal job in fact globally also they’ve made it very clear that look India is going to be my sourcing base and I’m going to supply from India such equipments from India uh across in fact the last reported quarter they had a massive jump in their exports and some they were executing some projects abroad so I think that’s the space we want to be in we will not be experimenting too much in this space I think a very simple space so let’s go with that. So

I also saw there’s companies you’ve got the um oil and gas companies you’ve got some exposure there from what I understand historically as a house you all have taken bought those more from sort of tactical you know purchases rather than necessarily long-term structural plays but I is is that still the case or has your view on that changed?

No. So basically in the oil and gas space what we did realize was that the government has taken a conscious decision. the earlier they used to use it as a proxy for votes right uh cut the prices make fuel cheaper bring on inflation and obviously appeal to the consumer right I think what they’ve realized is that uh it doesn’t make too much of a difference to the consumer you got to make the prices steady right so by the way last year the average prices for crude were at $70 $, right? Today it’s close to $60. Ideally, these guys should have cut off their prices and let the benefits flow to the consumer if the government was involved, right? What this tells you is that the government is now open to the fact that look, let them enjoy profits, right? Cuz when the prices move up, they are the ones who going to bear the costs. So, let them have disproportionate profits to take care of the losses when as and when that happens. So the call is on crude right now not on anything else. If crude moves up obviously you’ll see us selling off our holdings as such but them earning so much disproportionate profits of what we like. And secondly the the ones that we own actually there’s only one that we own. uh that particular company has got a lot of moving parts with it, right? Uh they’re looking at deemerging certain parts, but if you look at the summer parts, it’s a it’s making a huge amount of sense plus the dividend yield and stuff like that. I think it’s a very good stock to own.

To what extent do you guys, you know, take a call or at least pay a lot of attention to interest rates and do you all have a house view on interest rates that colors your opinions in terms of what you buy and sell or is that something you just stay away from?

No. No, we do take a very proactive uh uh call on interest rates because we sincerely believe that interest rates not only impact the consumer sentiment but also the way the outside investor is looking at India, right? A rising interest rate scenario is always not too welcome. Uh because normally a rising interest rate means your your valuations have to be lower to compensate for that hike because your your DCFS now become less attractive, right? the discount rates move up. So as a result your existing the the uh current cash flows become smaller. Right? So that is the whole logic there. So that’s why we take a fairly proactive view and obviously uh falling interest rates is what we love and fortunately for us that is what’s panning out now as such and looking at the inflation I mean sub half a percent I don’t think the country needs that today right we need to have some kind of a nominal growth on the GDP front you’ve seen what happened in China right for the last three years that economy is contracting mainly because they have negative inflation ation. So I think the RBI is doing a wonderful job in at least getting uh the money flow going, cutting interest rates, getting the demand back. I think that’s what’s going to drive inflation going forward. So I have no doubt that even in the December FPC meet, you’ll see some cuts happening going forward. So anyway, so we are very clear that this is the way forward for us today. Maybe we’ll have some inflationary issues going to the end of next calendar year but today I think we are home and dry as such.

Know there’s another sector that you and Helios as a house have generally been quite bearish on for quite a while now which is the IT sector. If there is a downturn in that sector in terms of jobs and employment that has a very real effect on the economy in terms of a multiplier effect cuz these are the people who are starting families, buying houses, buying cars, you know, consuming generally in the economy and suddenly I mean I’m not saying goes to zero but if it falls from where it is today that’s a very real problem for everybody irrespective of what they do. So how how do you how do you sort of see that entire part of the picture? What I believe uh is going to happen out here is that uh probably initially there’ll be a hiccup right uh initially there’ll be a hiccup because you’ll see a lot of layoffs happening in the IT space per say okay uh that’s why I felt that when consumption kicks in you’ll see a lot of brick and motor spends happening right and this brick and motor spends can’t happen through AI right there the actual spends happening I mean people working there and stuff like that. Yeah. And that’s why the government also was very clear that you need the private sector to kick in in a big way.

If you look at the September numbers, the capex, I mean I’m talking with the quarter uh or rather the first half, sorry, not not the quarter, the first half ended September because September quarter is a bad comparison because last year was a negative quarter. So that’s why all numbers look very exciting. So let’s look at half first half to first half right now. Now if you look at the first half numbers there’s a 5% growth in capeex by the n 500 companies right doesn’t look that exciting but it’s on the back of a 1% growth which happened in the second half of last year okay on that there’s a 5% growth uh y why there’s a 5% growth but last uh first second half was only 1% right but that’s not the exciting part if you take out telecom from this equation because telecom There were a lot of 5G spends happening into the second half of last year. That was a big capex, right? So if you take off that 5G spends, the capeex now stands at 15%.

For the second half, first half of this year, Y growth of 15%.

Now that is exciting number, right? So I think the private sector has already realized that look, you have to now get into this game. We’ve been holding I mean they’ve been holding back uh capeex for roughly around I think a year two years or so two two and a half years uh before they really started spending now probably today it is maintenance capex and green brownfield but I don’t have any doubts with demand coming back into the play into picture we’ll start showing these green field spreads once that happens you’ll see a lot of employment happening per say and frankly I mean it unfortunately that space is going to suffer. There’s no doubt about that. In fact, uh, one of the reports that I was reading, Mckenzie was I think it was Mckenzie’s report. Uh, I don’t quote me on this, but don’t quote me as in I not sure which report it was, but the fact was that they were talking about in the immediate term 2 million job losses, right? Which I sincerely doubt because frankly, I mean, the whole base is around five or six million odd people employed with it, right? GCC is a part. I mean, I’m not talking about GCC right now, right? That’s a major employment generator. Anyways, so 2 million looks like a third of those people getting laid off. I don’t think it’s going to be such a huge number. Probably 10 15%. And not beyond that. And that also will be the base of the pyramid. Unfortunately, the base of the pyramid is entry- level programmers who won’t be needed too much. But the fact is that base has to shrink and if that base shrinks probably these guys will move into GCC’s or something else they’ll have to do as such. So they allow to find alternate deployments and I think the government also has realized and that’s why the incentives came at the time for manufacturing rather than for services sector because they want manufacturing but I think the manufacturing contribution today is some 14 15% to the overall GDP contribution that definitely has to move up for us to uh be a big player globally and obviously for the GDP growth to kick in and obviously to employ the number of people uh that is needed to be employed going forward.

Now I know you own KPIT but if I exclude that there’s essentially no allocation to this IT sector but I mean you know I obviously nobody actually knows for sure but at the risk of asking you to gaze into a crystal ball. Can you envisage a situation even at any point in the next 2 3 5 years or so where you would have a meaningful allocation to the sector or let me let me put it in a slightly more blunt way. Do you believe that this is a sector where the best days are firmly in the past?

So my feel is for till that time there’s a reset in that industry and that reset has to be fast. I think TCS has seen the uh seen the writing on the wall and that’s why they’re very verbose about laying off people and stuff like that. Uh they’re doing a good job on that. By the way there this is not a recommendation to buy TCS. We don’t own TCS, right? uh but I think they’ve they’ve taken that they’ve bitten the bullet. So basically that’s what I’m trying to tell you and uh they’re still hanging on hoping things will work out at some point in time. I don’t think it’s going to work. There has to be layoffs happening unfortunately and obviously the reset will be a very painful one. Probably over the next four five quarters. So at least one year maybe we’ll be staying away. we’ll see some whenever the companies come out and say look we made a mistake uh not made a mistake but look this is what we’re doing now and probably take a call then so at least for a year I don’t think you’ll see any entry into it in our portfolio per se maybe smaller players here and there but not the big

when the fund was first formed you had maybe 45 50 positions and today it’s closer to 70 what should my takeaway be from that is it that you’re seeing more opportunities and therefore more companies you want to own or is it that is it a risk mitigation you know tool how how or is it just something that changes over time

so the risk mitigation is always on the top of the mind right I mean it’s like basically you want to have enough liquidity in your portfolio to make sure that if there’s a big redemption coming I shouldn’t be caught short right so that’s how it is but that’s not the only criteria obviously you keep adding as in when you see new ideas coming and fortunately for us uh my uh uh my research team keeps churning out these ideas by the way every time we launch a new fund you see a few additions happening in my flexi cap right because my what I’ve what we’ve realized is that the research guys tend to get a bit lazy they can tend to get in their you know comfort zone that okay I’ve done so many companies okay let me just keep covering these guys and giving them updates but the moment you launch say a small cap or a midcap, you push them to get me more ideas for small caps, more ideas for midcaps and that’s when you see new ideas coming and I’m really excited with the small cap portfolio that we’ve developed uh and 60 odd stocks. Uh it’ll be out soon. I mean the the government end portfolio will be declared uh in December I think 10th or so. But anyway, so you’ll see that coming through and obviously you’ll see some of the ideas flowing into my flexi cap again. So you’ll see some more additions happening. Therefore, you know, so that’s how it’s going to work. So, Kish, as we as we mature, we get more names. So, that’s how it is. And fortunately, the flows are pretty good for us. Touchwood.

AUM has gone up what 10x from the launch. Uh this I’m talking about the flexi cap. Yeah. Yeah. Yeah. Yeah. Yeah. Which is I mean remarkable. And obviously, it’s a combination of both flows plus actual performance. Um but um but yeah, no, then sure. This was absolutely fantastic. Like I said, my goal was, you know, it wasn’t so much, oh, you know, market and, you know, is it going to go up or down? It’s it’s I my my I I genuinely want people to see this and know for sure that what is it that they’re buying when they buy this fund. And, you know, like I said, that’s why it was for this very specific podcast. But thank you so much for coming on and and I hope this becomes a November tradition. And I have you on every year at this time.

You don’t have to wait till November, Kish. You can do it every time. But it’s always a pleasure uh to be on your show. Thank you.