The Tailwind – Nov 2022

Hello folks,

In this Tailwind edition, we put exclusive spotlight on our Horizon smallcases, starting from the idea germination to how we manage it. We’re pretty sure you’ll definitely enjoy reading this one! Followed by, musings about growth score that gives us an understanding into the historical growth rates of our investee companies and its integration into our rebalance processes.

Let’s dive right in!

Markets Last Month

The month of November has extended the bullish market phase, as Nifty 50 climbs to an all-time high. Foreign money flowing in has provided thrust to our markets. That being said, there’s a distinct gap between the performance of large caps versus mid and small caps. The foremost reason behind large caps’ outperformance is investors’ preference to safety, as there is volatility on the counter. Now before moving on to specific sectoral observations, I’d like to touch upon the valuations scenario of our markets. When pitted against other EMs, we are almost trading at a 100% premium on a 1-yr Forward PE. This definitely paves way for caution going forward. And against developed markets, the gap shrinks however the premium persists.

On the sectoral bit, we’ve seen huge moves on PSU banks over the last few months, wherein they’ve moved anywhere between 8 to 16%, barring September. Our sense is asset quality clean up coupled with strong credit off-take is a huge tailwind for these banking companies. To top it up, they are also enjoying valuations comfort, as all the PSU banks (ex SBI) trade below 1x P/B as compared to private players in the 2.5x range. On the other hand, Auto companies, albeit, not shown strong performance in this month are actually seeing sentiments improving. Domestic sales have begun to pick up for 2Ws and 4Ws companies with easing in supply chain issues.

Performance of fee-based smallcases (As of November 30, 2022)

Inside Windmill Capital

Ask Us Anything!

Yes, you read that right. As a pursuit to enhance our communication with our investors, we conducted our first AMA session. Well, this is just the beginning and we will be hosting many live AMAs with our investors to clarify all doubts. Hope you liked this one!

Missed out on this AMA or have more questions? Ask us here and we’ll take it up in our next session!

Watch now

smallcase in Focus

All About Horizon smallcases

In this blogpost, we talk to you about the workings of different Horizon smallcases. The intention to write this one is to urge you to not get influenced by the short-term performance of these smallcases. You’ve to be in it for the long haul!

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Musings with Analyst

Understanding Growth Score

This blog post takes you through the journey of growth score and the way Windmill Capital has integrated the same in the rebalance process.

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Follow us on Twitter and LinkedIn

We prepare a whole host of educative content on our Twitter handle on markets and economy, with an easy to consume format. We are certain that following us there shall be value-additive for you.