Latest news with #SiddharthBothra
Time of India
18-07-2025
- Business
- Time of India
Earnings growth may be tepid next 2 years but equities offer better returns than gold: Siddharth Bothra
Siddharth Bothra , Fund Manager, Ambit Asset Management , says gold and silver are viewed differently from other commodities due to gold's historical role as a hedge against market uncertainty. However, gold has outperformed expectations, even surpassing some top-performing markets over the long term. While central banks are increasing gold reserves, suggesting concerns about the global financial sector, equities may offer better returns than gold or silver moving forward. What is your view on the market? Siddharth Bothra: Our view on the market is that if you look at the next two years, the earnings growth looks a bit tepid, more in the early double digits, and valuations across the market – be it largecaps, midcaps, or smallcaps are above their long-term averages. So, the return outlook for the next two-three years looks muted and as this market is coming on the back of a couple of very strong years, going forward it is going to be very stock specific and that is one advantage that India has. Explore courses from Top Institutes in Select a Course Category others Data Science Operations Management Public Policy Finance Data Analytics Technology Artificial Intelligence Management PGDM Others Healthcare Digital Marketing MBA MCA Design Thinking Project Management Leadership Cybersecurity Degree healthcare Product Management CXO Data Science Skills you'll gain: Duration: 16 Weeks Indian School of Business CERT - ISB Cybersecurity for Leaders Program India Starts on undefined Get Details There are good opportunities across various sectors. We had a very easy time over the last three-four years, when money-making was relatively easy in the stock market and the market was very broad-based. Our house view is that over the next two-three years, the market is going to move from a very broad-based market to a more concentrated one, a move more towards quality, more towards stock specific. So, it is going to be a difficult market and we need to be very stock specific to earn more than the outlook we have on the returns given the muted earnings growth and valuations being high. What are your sector takes and your sector approach? Looking at the churn going on sectorally, which are the laggards according to you and which are the ones which you would bank on for maybe two to three quarters now? I know you will be talking about the long-term as far as your strategy is concerned, but there has to be some sectors you are betting really high on and some that are out of flavour and trend. Siddharth Bothra: While the broader outlook remains muted, there are not many sector-specific standouts. but the sectors we would look forward to, include the consumption sector. It has not done that well over the last one-two years. Now, there seems to be many green shoots which suggest that this sector could come back whether it be the moves from the government side on the tax side or whether it be the upcoming pay commission opportunity and all these things suggest that the consumption theme could be something to look at with a one- to two-year perspective. The other segment where we would be positive on is industrials. We believe that while private capex could still be a couple of quarters away, in the industrial segment, there are a lot of stock specific opportunities. Many companies seem to be benefiting in a big way from the advent of AI by the fact that increasing use of software and technology is getting embedded in most of the industries. So, companies which have technological advantage, which are dominant in those particular segments, could see opportunities there. Live Events You Might Also Like: Mihir Vora on where to look for opportunities in the broader market So, consumption, industrials, and the broader BFSI still looks fairly attractive. These are the two-three sectors other than pharma where we like some of the domestic plays. So, these are the three-four sectors we would be focusing on. What is your view on the real estate sector? It was the top sectoral gainer yesterday. How do you see this sector because it is once again linked to the economy? Siddharth Bothra: Real estate is a rate sensitive sector and stands to benefit from the recent rate cuts and also the loosening liquidity environment that we are seeing. In that sense, real estate is not a sector where you can take a very long-term view, but within that, I believe it looks attractive and certain things have also changed in real estate sectors over the last few years. Increasingly consolidations are happening, some of the companies have now become more broad-based like earlier the value was coming more from future growth and now there are some good opportunities where valuations could be justified by cash flows. This is a sector where one needs to be still very stock specific and the view has to be more short- to medium-term because this is still not a sector where I would take a very long-term call. But again, this is a sector where one needs to be very stock specific and within that, there are some stocks which stand out and even we have looked at them though we do not own any of them. What is your view on gold and silver?Considering the rally in these metals, one cannot think about not having them in the portfolio and for that reason you need to have at least 10% to 15% exposure in gold and silver. Is this the time for one to go heavy in gold or silver? At a portfolio level, you have always guided in favour of diversification. Siddharth Bothra: Gold and silver I would look separately from other commodities because overall outlook on the commodity including crude is weak in a way but gold has been a complete contrast. Right from the beginning of the career we have always thought of gold as a hedge. So whenever markets looked very upbeat or when markets were weak, you would look for gold or silver as a contrary bet. You Might Also Like: Buy on dips; expect a 1,000-point rally over next 30-45 days: Rahul Sharma But in the last few years, it has almost turned out to be the other way, like everything is going up. In fact, if you look at gold on a 20-25-year basis, it has even beaten some of the best markets. So, I am a bit baffled here because the inherent thinking on gold other than the fact that now more and more central banks are looking to increase their hedge and have more gold, which in a way shows lesser confidence in the global financial sector, is a very broad theme. But other than that, the view on gold has always been that this is an asset class which does not produce cash flows and hence for investors, other than as some kind of a diversification, should be avoided. Other than that broad view that central banks are now increasingly looking to add more and more gold, I would believe that you would probably make better returns in equity from here on rather than being in gold or even silver.
Economic Times
21-06-2025
- Business
- Economic Times
The power of the obvious: How Siddharth Bothra finds coffee can stocks with simplicity
Edited excerpts from a chat: Ambit describes the Coffee Can Portfolio as a low-churn, quality-focused, large-cap strategy. How do you screen for companies that meet your criteria of long-term revenue growth, high RoCE, and durable competitive moats? How has your portfolio changed in the last 2-3 years as we have seen newer companies and business models challenging the dominance of incumbents? Live Events Coffee Can stocks are typically high PE stocks. How do you make sure you don't overpay for the long-term growth story? You maintain low churn. In a rapidly evolving macro environment, what prompts you to sell or add a name? The AUM breakdown shows ~86% in large-caps, with modest exposure to mid and small caps. Do you see attractive mispriced smaller quality names today? What is your take on sector exposures—for example, financials, consumer, telecom? Are there particular sectors you've recently tilted more toward or away from? Finally, how do you view the Coffee Can strategy's relevance for today's investor: is it best suited for wealth builders with 8–10 year horizons—or is there merit even for shorter-term investors seeking stability? (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel In a market addicted to complexity, Siddharth Bothra finds comfort in clarity. The Ambit Asset Management fund manager isn't chasing moonshots or falling for market fads. Instead, his Coffee Can Portfolio is built on a deceptively simple idea: buy high-quality businesses with enduring moats, strong returns, and the power to compound quietly over investment screening is a mix of qualitative and quantitative methodology, wherein we ascribe 30% to nine quantitative filters and 70% weight to seven qualitative frameworks. Both need to validate each other for a stock to get selected. For example, if the qualitative analysis suggests that the company has multiple moats and strong pricing power, it should reflect in a steady margin profile with low volatility, superior margins and return ratios compared to competitors etc. We do not view investing as a treasure hunt. The fundamental principles of investing are well known. Instead of re-inventing the wheel, our approach is to leverage on the power of simple and obvious opportunities. Our investment approach is not that of "placer mining," the process of sifting through piles of sand for specks of gold. Instead, we attempt to apply our pricing power framework to find the large, unrecognized nuggets of gold that sometimes lie in plain sight on the ground. Our key focus is on capital protection – our first attempt is to understand the downside risk. We are willing to forego potential returns in poor governance stocks and deep cyclical and fad stocks to limit our downside risk. What risk tolerance spectrum an investor chooses depends on the investor's goal. If one is aiming for Longevity (magic of compounding) leaning will be more towards defensiveness and conservativeness. Similarly, if aim is for rapid speed (glory like a shooting star) then leaning will be more towards high risk tolerance and aggressiveness. We approach investing with a mindset of a marathon and aim to benefit from the 'Magic of Compounding'.Ambit Coffee Can Portfolio (ACCP) has undergone some fundamental changes in the last year or so. We created space for 30% of portfolio for what we describe as 'Prospective Coffee Can Companies', which meets all our qualitative filters, but may not have the 10 year long quantitative history we used to seek earlier. This allows us to have a good mix of established and emerging coffee can companies across the corporate life cycle. Essentially, we shifted our focus more from static quality to forward quality. While static quality is indexed to the past, we seek companies that will be successful over the next five to ten years. We go beyond conventional wisdom and apply the proprietary Pricing Power framework. Our investment focus is on companies in the Sweet Investment Zone, which lies between late-stage two and late-stage three buckets of a corporate life cycle. The sweet investment zone is where companies generally witness J-curve growth and the bulk of the valuation re-rating occurs, presenting a high probability of finding this is the common perception, not all quality or 'Forever' characteristic type companies with high pricing power are necessarily expensive. Often investors misjudge the longevity and optionality of such companies, value of which is not captured in trailing and one-year forward PE multiples and label such companies as expensive. Moreover, one should look at it from a portfolio valuation perspective. For example ~83% of the ACCP stocks are within the bucket of value and GARP, with only ~17% in the expensive PE segment. The companies in the expensive PE segments to our mind on an intrinsic valuation basis due to higher growth period longevity and optionality continue to be attractive on an intrinsic DCF absolute valuation basis which is what really matters. Since pricing power is such a pervasive concept, there are good reasons to expect that it is already 'priced in' by the market and does not offer consistent outperformance. However, several empirical studies have proven that companies with strong pricing power have historically earned consistently strong returns while maintaining a lower risk profile. Moreover, they have demonstrated similar characteristics across different geographical markets, lending credence to the long-run reliability of pricing power as an investment factor. While constructing our portfolio, we believe in being suitably defensive as we need to be prepared for a 'Black Swan Event' at all magic of investing is understanding compounding. Compounding cannot happen to our mind unless one has a long term investing perspective. Hence, typically we aim for churn ratios of less than 20-25%. The key reason to sell a stock is if we feel our buy narrative is getting invalidated. Other reasons being to accommodate a much superior quality business with better risk reward or portfolio position sizing. Simply eliminating the short-term mindset that impedes compounding can provide a significant source of alpha. Hence, we approach investing from an infinite growth mindset and seek the magic of compounding. Magic of compounding is not possible unless one focuses on Quality and Longevity of Growth. Companies with 'Pricing Power' is one of the key elements determining Longevity of Growth for a company - which is essential for sustainable long term is a large cap fund, with a possible range mix of 80% in large caps and 20% in SMID. We position the fund within this range depending on various factors. However, currently we believe that the risk reward is better for large cap category in general, though we realize that good bottom up ideas can be present across market caps and as such within this range we remain market cap have almost ~40% weight in the BFSI vertical across private banks, insurance, NBFCs and capital infrastructure plays. Hence, no surprise that this is the vertical we find most attractive currently. We also have a significant exposure to telecom and are in the process of increasing our weight for the consumer sector as many more bottom up ideas within this segment are increasingly looking more Coffee Can Portfolio (ACCP) is designed for niche, long-term investors seeking superior absolute returns by investing in high-quality businesses with sustainable compounding through strong pricing power. Our endeavour is to be well diversified across sectors and have a concentrated 'All weather portfolio' with an eye to be always prepared for 'Black Swan Events'. While we will seek a prudent mix of offense and defence in portfolio, capital protection is our main credo. The strategy targets Growth companies with lasting Quality and 'Forever' attributes, leveraging on a proprietary Pricing Power Framework to identify businesses with robust margins, and steady earnings growth. We believe, investing in 'Forever companies' or 'companies with pricing power' is one of the most key elements determining Longevity of Growth for a company. Our investment strategy is designed to achieve our objectives by minimizing behavioural biases and institutional imperatives. We believe, ACCP investment style is timeless and has been proven over decades, hence it is most relevant for any investor who has an investment or business ownership mindset as opposed to a speculative mindset. Also, ACCP portfolio is relevant for any investors who have at least a two year plus investment horizon.
Time of India
21-06-2025
- Business
- Time of India
The power of the obvious: How Siddharth Bothra finds coffee can stocks with simplicity
In a market addicted to complexity, Siddharth Bothra finds comfort in clarity. The Ambit Asset Management fund manager isn't chasing moonshots or falling for market fads. Instead, his Coffee Can Portfolio is built on a deceptively simple idea: buy high-quality businesses with enduring moats, strong returns, and the power to compound quietly over time. Edited excerpts from a chat: Ambit describes the Coffee Can Portfolio as a low-churn, quality-focused, large-cap strategy. How do you screen for companies that meet your criteria of long-term revenue growth, high RoCE, and durable competitive moats? Our investment screening is a mix of qualitative and quantitative methodology, wherein we ascribe 30% to nine quantitative filters and 70% weight to seven qualitative frameworks. Both need to validate each other for a stock to get selected. For example, if the qualitative analysis suggests that the company has multiple moats and strong pricing power, it should reflect in a steady margin profile with low volatility, superior margins and return ratios compared to competitors etc. We do not view investing as a treasure hunt. The fundamental principles of investing are well known. Instead of re-inventing the wheel, our approach is to leverage on the power of simple and obvious opportunities. Our investment approach is not that of "placer mining," the process of sifting through piles of sand for specks of gold. Instead, we attempt to apply our pricing power framework to find the large, unrecognized nuggets of gold that sometimes lie in plain sight on the ground. Our key focus is on capital protection – our first attempt is to understand the downside risk. We are willing to forego potential returns in poor governance stocks and deep cyclical and fad stocks to limit our downside risk. What risk tolerance spectrum an investor chooses depends on the investor's goal. If one is aiming for Longevity (magic of compounding) leaning will be more towards defensiveness and conservativeness. Similarly, if aim is for rapid speed (glory like a shooting star) then leaning will be more towards high risk tolerance and aggressiveness. We approach investing with a mindset of a marathon and aim to benefit from the 'Magic of Compounding'. How has your portfolio changed in the last 2-3 years as we have seen newer companies and business models challenging the dominance of incumbents? Ambit Coffee Can Portfolio (ACCP) has undergone some fundamental changes in the last year or so. We created space for 30% of portfolio for what we describe as 'Prospective Coffee Can Companies', which meets all our qualitative filters, but may not have the 10 year long quantitative history we used to seek earlier. This allows us to have a good mix of established and emerging coffee can companies across the corporate life cycle. Essentially, we shifted our focus more from static quality to forward quality. While static quality is indexed to the past, we seek companies that will be successful over the next five to ten years. We go beyond conventional wisdom and apply the proprietary Pricing Power framework. Our investment focus is on companies in the Sweet Investment Zone, which lies between late-stage two and late-stage three buckets of a corporate life cycle. The sweet investment zone is where companies generally witness J-curve growth and the bulk of the valuation re-rating occurs, presenting a high probability of finding multi-baggers. Coffee Can stocks are typically high PE stocks. How do you make sure you don't overpay for the long-term growth story? While this is the common perception, not all quality or 'Forever' characteristic type companies with high pricing power are necessarily expensive. Often investors misjudge the longevity and optionality of such companies, value of which is not captured in trailing and one-year forward PE multiples and label such companies as expensive. Moreover, one should look at it from a portfolio valuation perspective. For example ~83% of the ACCP stocks are within the bucket of value and GARP, with only ~17% in the expensive PE segment. The companies in the expensive PE segments to our mind on an intrinsic valuation basis due to higher growth period longevity and optionality continue to be attractive on an intrinsic DCF absolute valuation basis which is what really matters. Since pricing power is such a pervasive concept, there are good reasons to expect that it is already 'priced in' by the market and does not offer consistent outperformance. However, several empirical studies have proven that companies with strong pricing power have historically earned consistently strong returns while maintaining a lower risk profile. Moreover, they have demonstrated similar characteristics across different geographical markets, lending credence to the long-run reliability of pricing power as an investment factor. While constructing our portfolio, we believe in being suitably defensive as we need to be prepared for a 'Black Swan Event' at all times. You maintain low churn. In a rapidly evolving macro environment, what prompts you to sell or add a name? The magic of investing is understanding compounding. Compounding cannot happen to our mind unless one has a long term investing perspective. Hence, typically we aim for churn ratios of less than 20-25%. The key reason to sell a stock is if we feel our buy narrative is getting invalidated. Other reasons being to accommodate a much superior quality business with better risk reward or portfolio position sizing. Simply eliminating the short-term mindset that impedes compounding can provide a significant source of alpha. Hence, we approach investing from an infinite growth mindset and seek the magic of compounding. Magic of compounding is not possible unless one focuses on Quality and Longevity of Growth. Companies with 'Pricing Power' is one of the key elements determining Longevity of Growth for a company - which is essential for sustainable long term compounding. The AUM breakdown shows ~86% in large-caps, with modest exposure to mid and small caps. Do you see attractive mispriced smaller quality names today? ACCP is a large cap fund, with a possible range mix of 80% in large caps and 20% in SMID. We position the fund within this range depending on various factors. However, currently we believe that the risk reward is better for large cap category in general, though we realize that good bottom up ideas can be present across market caps and as such within this range we remain market cap agnostic. What is your take on sector exposures—for example, financials, consumer, telecom? Are there particular sectors you've recently tilted more toward or away from? We have almost ~40% weight in the BFSI vertical across private banks, insurance, NBFCs and capital infrastructure plays. Hence, no surprise that this is the vertical we find most attractive currently. We also have a significant exposure to telecom and are in the process of increasing our weight for the consumer sector as many more bottom up ideas within this segment are increasingly looking more attractive. Finally, how do you view the Coffee Can strategy's relevance for today's investor: is it best suited for wealth builders with 8–10 year horizons—or is there merit even for shorter-term investors seeking stability? Ambit Coffee Can Portfolio (ACCP) is designed for niche, long-term investors seeking superior absolute returns by investing in high-quality businesses with sustainable compounding through strong pricing power. Our endeavour is to be well diversified across sectors and have a concentrated 'All weather portfolio' with an eye to be always prepared for 'Black Swan Events'. While we will seek a prudent mix of offense and defence in portfolio, capital protection is our main credo. The strategy targets Growth companies with lasting Quality and 'Forever' attributes, leveraging on a proprietary Pricing Power Framework to identify businesses with robust margins, and steady earnings growth. We believe, investing in 'Forever companies' or 'companies with pricing power' is one of the most key elements determining Longevity of Growth for a company. Our investment strategy is designed to achieve our objectives by minimizing behavioural biases and institutional imperatives. We believe, ACCP investment style is timeless and has been proven over decades, hence it is most relevant for any investor who has an investment or business ownership mindset as opposed to a speculative mindset. Also, ACCP portfolio is relevant for any investors who have at least a two year plus investment horizon.
