Multiply Your Wealth: Investing in High-Quality Companies for Long-term Growth

At Green Portfolio, we believe in buying quality and growth companies at a reasonable price that are undervalued with a huge potential to grow in the future. We invest in companies having strong fundamentals, a strong balance sheet, low debt, are cash-rich, resilient management and a high promoter’s stake. We avoid highly leveraged businesses and have an aversion towards public sector names.

Based on our core philosophy, we have created the High Quality Right Price smallcase

Investment Philosophy of High Quality Right Price

As the name suggests, the focus is to invest in companies that have high-quality financials, businesses, and management all while the stock being available at the right price. The purpose is to invest in 15-22 companies that can Multiply Your Wealth in the next 3-5 years.

Stock Selection Criteria

• Companies that have sound financials. This is made sure by picking only those stocks that have low debt on books. D/E ratio is an essential screening criterion here.

• Companies available at a reasonable valuation so that profits can be maximized. It is also made sure that the management of such companies has strong integrity, is capable, and has overall good corporate governance.

• Companies chosen are well researched and whose news is easily available with transparency.

• Anti fragility: We constantly look for businesses that have survived through at least one down-cycle. This gives us confidence in the underlying business model and its strengths. A strong balance sheet adds to this thesis, as in a downturn, it helps in survival, but in an economic up-cycle, a strong balance sheet enables businesses to grab big opportunities.

Link between HQRP smallcase and India’s journey towards becoming a World Superpower

We want to invest in companies driving India’s growth story and who benefit from Government initiatives such as Aatma Nirbhar Bharat theme. Stocks which are a part of the smallcase benefit from one or more of the following:

• Aatma Nirbhar Bharat Policy Formulated by PM of India to make India a “bigger and more important part of the global economy” pursuing policies that are efficient, competitive and resilient.
• China Plus One business strategy to avoid investing only in China and diversify business into other countries. Many companies are looking to diversify their manufacturing into countries like India as a part of their de-risking strategy.
• Production Linked Incentive (PLI) Scheme extends an incentive of 4% to 6% on incremental sales (over the base year) of goods manufactured in India and covered under target segments to eligible companies, for a period of five (5) years.
• Make in India initiative to encourage companies to manufacture in India and encourage dedicated investments into manufacturing.
• Government initiatives like Anti Dumping Duty & Import Licensing.

Who should invest in this smallcase?

This smallcase can help investors who are looking for returns over a period of 3-5 years. But with returns comes risk.

It’s important to understand that these stocks are volatile and fluctuate regularly. Although we are bullish on them in the long run, it’s possible to witness high volatility depending upon the market condition.

Short-term volatility may be witnessed but by sticking for 3-5 years, the investor can most certainly witness capital appreciation. So investors who are looking for high returns and don’t mind onboarding volatility can definitely invest in this smallcase.