Dhiraj Poddar

The Colossus episode on Bajaj Finserv where Matthew Reustle, CFA interviews Marcellus Investment Managers's Saurabh Mukherjea, FRSA is an exceptional one. Worth a listen / read even if you are not in fintech, if only to understand what an incredibly tight biz model they have built. The growth numbers are mindblowing, resulting in a $50b mcap co. Saurabh: "over the last 16 years, this company has compounded share prices 1,000x. That's underpinned by 30% loan book CAGR, 50% PAT CAGR. So 50% PAT CAGR over 16 years, I think that's roughly 650x PAT compounding over 16 years." Whoa! They say there are 4 elements to a lending business - cost of capital, cost of acquiring customer, quality of underwriting, and ability to collect. You need to great at at least two of these and ok at the others (cant be bad) to run a profitable lending biz. Bajaj Finance is that rare lender, who is great at all four elements, from what I understand from the podcast. Some fascinating data points in the podcast. 1/ Like this one on the lending market, and how Bajaj is about a sixth of the nonbank lending market. Saurabh: "Banks lend around $2 trillion in India. Nonbank sector lends around $250 billion. Bajaj Finance's loan book is $40 billion." 2/ The explainer on their hero product, the zero-interest EMI was illuminating. 3/ I heard once that Bajaj Finance is Salesforce's 2nd biggest account globally. I couldnt believe it then, but now after reading / hearing that Salesforce had to create a separate dbase for them (they have 1000 datapoints on 200m Indians), I can understand. 4/ The 65-hour workweek and the long hours is interesting. It is not usual for an Indian co to have a 7am start to the workday, and for the long hours to be so explicitly coded. All in all, a terrific primer on a world-class business that has got built out of India. Saurabh Mukherjea has an exceptional handle on the business. Loved the colour he has on the biz such as how each unit does their own capital allocation, and how HQs ups or downs their quota depending on their performance. Link to the piece (incl transcript): https://lnkd.in/ge2gBjiS

111

2 Comments

Fiscal deficit for H1FY25 at Rs 4.75 lakh crore, 29.4 percent of the full-year target Experts indicate that the government may end up achieving a lower fiscal deficit ratio than the 4.9 percent target set in the Union Budget 2024-25, partially helped by a higher-than-expected RBI dividend of Rs 2.1 lakh crore. https://lnkd.in/dNrJQstN

4

Advent International is investing INR 2475 cr (~$3bn) in Apollo Hospitals's subsidiary, Apollo HealthCo. The transaction will also see the merger of its wholesale pharma distribution unit Keimed Private Limited and online healthcare business Apollo 24|7 under Apollo HealthCo. The background: Apollo HealthCo= Keimed (B2B pharma distribution) + Apollo 24 7 (online pharma) Apollo HealthCo, the digital health and services business of Apollo Hospitals, has been pressuring the hospital operator's bottom line, hurt by its cash-guzzling pharmacy business Apollo 24/7. Apollo HealthCo posted a loss for the sixth straight quarter in February. Advent International is a global PE with 17 investments (~$5.8bn since 2009) in India (12 current, 5 exits). Its other Indian healthcare investments include Cohance Lifesciences, Suven Pharmaceuticals and Bharat Serums and Vaccines Limited. Is it a good deal? The market doesn't think so! Shares of Apollo Hospitals Enterprise dropped 8% in opening trade on Apr 29 as investors were disappointed with the valuations offered in the deal. According to the deal, it valued Apollo 24 7 at $1.7bn and Keimed at $9.6bn Nuvama Group said while the deal was long overdue, the valuation commanded by Apollo 24/7 at $1.7 bn is lower than the estimated $2.7 bn. It not only comes as a negative surprise but also a huge letdown. The brokerage also said doubling Keimed's valuation for the deal, just within a year also seemed aggressive. Jefferies also shared the same view on Apollo 24 7's valuation While Prabhudas Lilladher Private Limited also acknowledged that the stake sale of Apollo HealthCo was done at a discounted valuation, it sees the merger of Keimed with the arm as a positive step as it removes overhang of any cost leakages. That with the added management guidance of growing EBITDA gives them comfort Future Outlook: According to the management commentary, the combined entity is expected to deliver Rs 25,000 ($3bn) crore of revenue in 3 yrs with 7-8% EBITDA, up from around Rs 13,600 crore and 1.5% now. This is an EBITDA growth of about 9x in 3 years! This growth will be achieved through Apollo 24/7 breakeven in ~2 years, higher margin realization through supply chain efficiencies, and accelerated growth in the private label business Though pharmacies in India are growing at 12% YoY, Apollo believes that large players like themselves can easily grow at 20-25% YoY It seems that Apollo was a bit desperate to inject in money and was okay with taking a slightly below-par deal. That said, this deal should reduce the drag from 24/7's operating cost (and cash burn) and strengthen both its pharmacy and hospital businesses. The merged entity could also leverage Keimed’s over 70,000 store network to push private label sales and unlock synergies. #healthcare #apollo #advent #privateequity #india #apollo247 #pharma #pharmacy

4

Story of a 137 year Business Group - born in God’s own Country 🌴 🌳 🥥 ! In the heart of Kerala 🏝️ over a century ago, Mr. Nainan Mathai founded a business conglomerate - to be known as “Muthoot Group’. We all know about 🟥 Red Muthoot. But there is another Muthoot from the same origins - but less known - the 🟦Blue Muthoot or Muthoot Capital Services Limited (MCSL). It's a story of grit, growth and vision that spans over 3 decades and can serve as an inspiration to many. Mr Muthoot Papachan was a visionary who started Muthoot Capital in the early 90’s. One thing very clear to him as a strong business principle: Trust. In his own words - “If someone had ten rupees in savings, five would go to SBI, three to Federal Bank, and two to Muthoot.” This trust, earned over decades, has been the bedrock of Muthoot Capital’s success. The business model of the entity is worth studying on two aspects > 🥇 business models will have to evolve over time to keep pace and 🥈   diversification can help a business flourish on multiple growth engines while reducing risk of dependence on one revenue line. 🏅 Evolution of business model  1994 > Muthoot Capital started as a ‘Direct Selling Agent’ (DSA) to Banks.   2008 > Loans for two wheelers was an emerging market in Kerala and the rest of India. Seeing this opportunity, Muthoot Capital pivoted to starting its own two wheeler financing business. After this, there was no looking back! 2016 - 17 > Muthoot Capital started diversifying 👍 🏅 Diversification  Currently, Muthoot Capital has a well diversified business consisting of auto financing, used car financing, commercial vehicle financing, loyalty loans and FDs. A key factor in MCSL's success is its technology driven growth 💻 Their loan origination system can provide approvals in as little as 10 to 15 minutes, streamlining operations and enhancing customer satisfaction. Muthoot Capital disburses approximately 15,000 to 20,000 loans per month using its tech infrastructure. Like other NBFCs, Covid was a challenging time for Muthoot Capital. Business took a beating as people were rendered immobile due to lockdown. However, what is praiseworthy is that by sticking to basics - that is by focusing on ➕ unit economics and diversifying across multiple revenue lines - from a net loss in FY 22, the company has turned around to clock a profit of Rs 122 Cr in FY 2023.  Muthoot Capital currently is present across 20 states and serves around 4,50,000 customers.  Recently, I had a fascinating discussion with the CEO of Muthoot Capital, Mr. Mathews Markose and CFO, Mr Ramandeep Singh. What stood out in the candid talk was a very clear view on profitability along with vision to making this entity thrive for the next century ⏲️ If you want to know about the 9 fold growth strategy of Muthoot Capital, watch the video here 🎥 https://lnkd.in/gtpFRAM5 Muthoot Capital Services Ltd - India Mathews Markose Ramandeep Gill #management #nbfc

14

Sharing concise summary of Union Budget 2024-25. Fiscal Prudence continues! Tax rationalisation to simplify processes and amplify revenues!! Ambit Private Limited Trilok Agarwal Siddharth Bothra Bhargav Buddhadev Dhiraj Agarwal #Familyoffices #wealthmanagement #portfoliomanagement #assetmanagement #Nifty50

59

1 Comment

Decode #Budget2024 with 4 round table discussions I lead with top experts. The talks will help you unpack issues before Budget 2024 on topics both macro and micro. Understand how these issues affect you and your money. https://lnkd.in/giBDhQsP In partnership with Upstox Creative partner InOut

24

Case Study: Portfolio (mis)management by a reputed wealth management firm We onboarded a client with a portfolio of around INR 50 Crores, earlier managed by a big & reputed wealth management company. The portfolio was constructed for retirement purposes with 12 years of investment horizon. The risk profile of the client is moderate. When we did the portfolio health check-up, we found that there were close to 50 products in the portfolio. 40% allocation in AIFs and 20% average in debt. The annualized returns were around 10% over the last 5 years. All investments were in commission-based regular plans generating a commission of at least INR 50 LAKHS ANNUALLY for the wealth management company & client had NO idea of the hefty commissions going out every year. What's wrong with this portfolio? - Over-diversification: An ideal portfolio shouldn't have more than 15 products (max. 20 depending upon certain cases). When you invest in mutual funds, PMSs, or AIFs, the fund managers will spread the investments across multiple securities. A concentrated portfolio with high-conviction products brings better results. This is a simple understanding then why so many products? Usually, a new product offers a higher commission to distributors. This becomes a strong incentive to keep introducing new products to the portfolio. - Low returns: The underperformance was due to poor-performing equity investments across portfolio. Why these schemes were not changed could be due to the lack of focus of the relationship manager on the portfolio or higher trail commission. - Low liquidity: Excessive exposure to AIFs and some locked-in debt products offered no liquidity to swiftly change allocation in the portfolio if any opportunity arises. - Unsuitable portfolio construction: Despite a moderate risk profile, the portfolio consisted of high-risk AIFs and only around 20% in debt. This is certainly not aligned with the client’s interests. Again, reason could be that AIFs pay higher commissions than PMSs which pay higher commissions than MFs. Our solution: - Asset allocation alignment: Created a broader level asset allocation strategy across equity, debt, and gold to align with the risk profile and investment objective of the client. -Shift to zero-commission Direct Plans: Created a plan to shift all the investments gradually to direct plans of MFs, PMS, and AIFs. This will save the client upwards of INR 50 lakhs in commission payout and will be added to the portfolio gains. For our services, the client pays fees directly to us which is less than 25% of the commissions saved. - Minimize shifting costs: We removed all the underperforming funds by minimizing tax and exit load impact. - Focused portfolio: Reduced the number of products to 14 after thorough research.  The exercise took some time to complete but it was worth the effort to see a satisfied client who knows his retirement portfolio is in reliable hands. #casestudy #wealthmanagement #truemindcapital

102

18 Comments

Holy Grail of Asset Management Companies are returns and governance. Any miss on either of them creates an outflow of capital.. which can break the AMC... Case in point in India... Quant MF and Franklin Templeton MF... Very recently papers reported that a big PMS firm in India is facing redemption pressure more for returns issue... In US, Franklin Templeton reported outflows of $37 Billion in last quarter due to governance lapse on derivative trades #sec #amc #markets

10

A significant milestone on the Sarvagram journey and we are very excited to continue our support to the stellar team. When we invested in 2022, we saw a distinctive company which was serving an unaddressed segment in a very large market i.e middle class households in rural India. The narrative around rural financing has primarily focused on farmers and low-income populations. However, there's a huge gap in addressing the needs of the aspirational rural middle class—the 80-100 million households with annual incomes ranging from ₹3-5L, spread across multiple income sources. This demographic is eager to improve both their income levels and quality of life, yet their financial needs have often gone unmet. Banks and microfinance institutions have targeted agriculture or low-income women but the rural middle class is a large whitespace. Though they may have access to product financing like two-wheeler or car loans, a significant portion of their aspirations remains unaddressed. SarvaGram is stepping into this gap with a holistic, customer-centric platform that offers a diverse range of financial services—from lending products and farm mechanization solutions to insurance offerings — as opposed to a mono-line strategy, which we believe works better in denser urban markets. In addition to our thesis on rural lending, we have found working with the stellar team, led by Utpal Isser and Sameer Mishra, a collaborative and insightful partnership. Their exceptional execution and understanding of the rural market have enabled SarvaGram to create lasting impact and drive sustainable growth. It has been equally enjoyable to learn from their experiences and we truly appreciate the openness of team. We have also appreciated working with our co-passengers from #Elevar, #Elevation and #Temasek and look forward to the #Peak XV team. With this fundraise, SarvaGram is on track to continue its impressive growth trajectory and we are excited to be part of this journey of SarvaGram driving meaningful change for rural middle-class households. Utpal Isser SarvaGram Sreeraman V TVS Capital Funds #FundingSuccess #RuralIndia

28

Vocal for "Local" – in its true sense! I recently had a conversation with my good friend Ashish Kumar Gupta, the founder of Jeevika Ashram. We go way back to our days at Sonata Finance Pvt. Ltd. & SV Creditline Private Limited, and I’ve been truly amazed by Ashish’s transition from finance to rural upliftment. His dedication to creating jobs and preserving India’s rich traditional craftsmanship through Jeevika Ashram is commendable. Microfinance was designed to provide access to capital, enabling those at the bottom of the pyramid to upskill and secure livelihoods. While MFIs have excelled in delivering financial support, the vital aspect of upskilling often gets overlooked. Ashish made an important point: for upskilling and traditional craftsmanship to thrive, local production and consumption must be in harmony. Global markets may offer higher earnings for artisans, but the crucial feedback loop between customer and producer is often lost. This connection is essential for improvement and preserving authenticity. It’s time for MFIs to adopt a holistic approach—focusing not just on financial inclusion, but also on cultural preservation and skill enhancement to ensure sustainable growth in our communities. Sagacia Growth Partners LLP #VocalForLocal #Microfinance #RuralUpliftment #LocalConsumption #SustainableGrowth

162

3 Comments

Market Analysis: Key Insights and Investment Opportunities Anil Singhvi, Managing Editor at ZEE Business, had an insightful conversation with Devang Mehta, Director - Equity Advisory at Spark PWM Private Limited, covering crucial market perspectives: Market Direction: Current market correction signals a short-term adjustment phase. However, fundamental economic indicators remain robust. Mid & Small Cap Outlook: Selective opportunities exist in this segment. This could be an opportune time to invest in quality companies with strong fundamentals. Trump Tariff Impact: Limited anticipated impact on Indian markets. Our domestic economy's strength serves as our biggest buffer. Investment Opportunities: Capital Goods ER & D Discretionary Consumption Infrastructure Key Recommendations: - Focus on long-term investments - Maintain portfolio diversification - Adopt regular investment strategy Expert's View: "The current market dynamics present selective buying opportunities, especially in sectors showing strong growth potential." - Devang Mehta Remember: Market corrections often create opportunities for patient investors looking at quality stocks with strong fundamentals. Watch the complete interview here: https://lnkd.in/dPFjMAvE #MarketAnalysis #InvestmentStrategy #IndianMarkets #EquityMarkets #FinancialMarkets #InvestmentOpportunities #StockMarket

16

1 Comment

My views in Hindu Businessline on the magnanimous listing of the one and only Bajaj Housing Finance https://lnkd.in/dUDR8XRX

19

I’ve been turning down all media requests for a post election analysis but talk of whether alliances will hold post elections reminded me of something I wrote 26 years ago - before a Lok Sabha Election result.   The basic premise: one who holds 30 seats may have the same power, or even more, as compared to someone who holds 245 seats.   A mathematical Power Index explains how   Quote Let’s get on with the “Power Indices” of the various political parties.   Think of it this way : suppose you require a 50% plus majority to form a government and there are 3 parties in the parliament with the following seat tally : 44%, 39% and 17%.   Now, any two of these can join together to form the government and therefore all three of them have exactly equal power, no matter that Party 3 has got less than half the number of seats that the first two have. This is a concept that is of use in any ‘majority wins’ decision rule from shareholder resolutions to jury decisions.   Suppose there are 4 parties in the fray this time around: A, B, C and D parties, having 35%, 34%, 17% and 14% of the seats resp. Again if a simple majority is needed to form a government, any two out of A, B & C can form a government whereas the Party D’s support is never really crucial to anyone.   If this party’s 14% is added onto the percentages of any of the first three parties, the sum does not exceed 50% and any larger coalition of parties doesn’t require its support anyway. Party D is therefore called a ‘dummy’ - an apt term for someone whose vote can never change a losing coalition into a winning one or vice versa.   The dummy has no power, while all the other three parties i.e. A, B and C have equal power.   This is inspite of the fact that Party C has far fewer seats than A and B and only a few more than the smallest one i.e. Party D   For those interested, there is a technical concept called the Banzhaf Power Index (BPI) of a group, party or person which is defined as the number of ways in which that group, party or person can change a losing coalition into a winning one or vice versa.   In the preceding example, the BPI of parties A, B and C are equal and that of Party D is zero.    In fact as an individual MP, you are better-off being a part of Party C than Party A or B because as part of the government you get a disproportionate share of the goodies. This is exactly what happened in U.P. where virtually every MLA of a marginal party who joined the BJP government was made a minister - something that was a remote dream for most BJP MLAs.   Unquote (First Global's weekly 'Markets, Majorities and Maths', January 1998)   Thus if a few smaller partners can hold whichever coalition government to ransom, it introduces uncertainty.   “The more things change, the more they stay the same” Hence, I can repeat a 1998 piece which has contemporary parallels   We may be in for some interesting times.   History also shows coalition governments have been pretty good for the economy and markets.

119

13 Comments

Was nice to share some thoughts with Akshata Gorde and Financial Express (India) on SEBIs new proposed fixed price mechanism as an alternative to reverse book building for voluntary delisting schemes. Read on to know more: https://lnkd.in/g25YCj_D #SEBI #delisting #law

23

https://lnkd.in/gbsWykcF Indian family offices told me that Reliance Retail IPO will be a "super huge success" creating exceptional value for shareholders ! ( they also told that many billionaires are expected to queue outside Antilia for appointment with Isha Ambani !  I completely support their views and add my prediction that "2027 " will be Platinum,  Diamond year for Reliance Retail It's valuation can DEFINITELY jump by 60% to 80% in 2027( January, June and July will be Best months in 2027)  PS: If for any reason IPO is not done in 2025, then ,2027 should be the "blockbuster year" to plan it !  Qatar Investment Authority Zulfiquar Ghadiyali #relianceindustries  #swfs #institutionalinvestors  #familyoffices  #investors  #IndiasGrowth  #pmoindia  #pmoffice  #pefunds  #stocks  #IPO  #stockstowatch  #billionaires 

I am thrilled to share that I have joined JSW Ventures as Lead – Consumer Investments! This chapter is a continuation of my passion for partnering with bold entrepreneurs who tackle significant challenges with unwavering conviction. I’m eager to contribute, collaborate, and create meaningful impact in the consumer space, driving innovation and growth alongside visionary founders. If you’re building something transformative or just want to connect, feel free to reach out at [email protected]. Let’s build something extraordinary together! 🚀 #ConsumerInvestments #VentureCapital #Entrepreneurship

317

85 Comments

Excited to announce that we at Athera Venture Partners (formerly Inventus India) have secured a major capital commitment from HDFC AMC Select AIF FoF I Scheme for our ₹900 crore Fund IV. This milestone is particularly special as HDFC AMC, one of the most respected fund houses in India, joins a strong lineup of Limited Partners, including prominent Indian family offices and international foundations, who share our belief in backing bold entrepreneurs driving innovation. With this fund, we are committed to partnering with exceptional founders building category-defining companies in India across Consumer Internet, Enterprise Software, AI, and other emerging technologies. From this fund we’ve already made investments in promising startups like Ati Motors, Terra , ClickPost, CynLr, Hyperbots Inc., and Billion Hearts Software Technologies We are deeply grateful to HDFC AMC and all our LPs for believing in our vision and supporting our mission of enabling the Indian startup ecosystem. A big thank you to all the incredible founders, past and present, who have trusted us to be part of their journey—we wouldn’t be here without you. We’re excited about the journey ahead and look forward to backing many more transformative startups from India Read more about the announcement here: https://lnkd.in/gYC8Yk84 Samir Kumar Parag Dhol Rajiv Mehta Ishan Sinha Anshu Pandey Kavya Prudhvi Tanya Sequeira CA Kaushik A Mangala Jois #VentureCapital #Startups #TechInnovation #AtheraVenturePartners #HDFCAMC #Entrepreneurship

478

83 Comments