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The Tailwind from Windmill Capital

The Tailwind from Windmill Capital
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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 inter=gration 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!

To answer your questions about rebalancing, we’re hosting our first-ever live AMA with team Windmill Capital!

This is an opportunity for you to ask our team any questions you may have about the rebalance and get real-time answers from our experts.

Set a reminder for the AMA

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Alternatively, you can ask your questions here and we’ll make sure they are answered on tomorrow’s YouTube live.

Put down your questions for the AMA

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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!

Read this blog on Horizon smallcases

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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.

Read this blog about Growth Score

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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.

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The Tailwind from Windmill Capital
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