What is SKG India Value Fund?
SKG India Value Fund is created by SKG Assets & Holdings, a renowned financial service firm established in 2005 with offices in Delhi, Mumbai and Dubai. SKG specializes in the investment advisory and investment banking. We involved with over 30+ companies on the SME board in their IPO journey. SKG manages over 400 Crores in their Wealth Management division, it is their maiden Fund as the company is pivoting towards asset management with a niche in the SME Segment.
SMEs are backbone of the Indian economy; the country is full of amazing businesses with immense potential to grow if given the right direction and access to capital. But due to lack of promoter education and limited financial knowledge these companies find it difficult to find the correct representations in the capital markets. This hampers growth, productivity and lack of capital results in potential loss of business. SEBI has been relentless in creating a better environment to promote SMEs to tap the capital markets, regulatory norms have been relaxed, financial requirements have come down and for an SME to get listed on the stock exchange has become much easier.
While increasing the supply side on bourses, SEBI’s efforts in investor education has also created a huge demand for fresh investment ideas/companies. Post Covid, Retail participation in the equity markets, especially in the Small and Mid-cap space has gained momentum. We have also seen a significant increase in the risk appetite of this new breed of investors. Equity Mutual funds have seen double digit growth in their AUMs and these fund houses are always seeking out robust, growth-oriented businesses to invest in.
SKG India Value Fund aims to be in the center of this new demand-supply matrix. We want to connect the new age investor who firmly believes in the India growth story and is not averse to risk to a whole new breed of high growth stocks that will become multi-baggers in the future. We are experts in picking companies that are undervalued, where credible promoters are driving forward and participating in the economic boom. We believe that there is a visible gap in the system, India’s entrepreneurial spirit reflected by these companies is not captured by the stock market in its full potential. A lot of times, the stock price is not reflective of the true potential of these businesses. At through this fund, we want investors to participate in filling this gap and be part of this SME rush.
The Fund will invest in companies, which have the following characteristics
- Companies, which are in their early and more dynamic stage of the life cycle, but are no more considered new or emerging.
- Stock prices that appear to undervalue their growth prospects.
- The Strategy may invest in companies coming out with the IPO and whose post issue market cap (based on the issue price) would fall under above-mentioned criteria.
- Maintains competitive advantages by working in a niche or high-opportunity market.
- Demonstrated sound corporate governance, a successful track record with capital allocation, and long-lasting competitive advantages based on brands, operational procedures, and strategic assets.
Investment Thesis
- SMEs, sometimes family-owned, produce unnoticeable goods yet are the best in the world at those goods.
- They often operate in narrow markets and create distinctive items utilizing exclusive
- methods.
- These companies’ competitive advantages are more often attributed to the quality, total cost of ownership, excellent performance, and tight client relationships.
- The aim is to maintain a Buy & Hold on individual stocks during their projected period of outperformance, rather than remaining invested in a stock idea for the lifetime of the investment.
Success Stories
1. Rama Steel
SKG invested in Rama Steel in 2018 at a market cap valuation of Rs. 150 Crore, today the company is valued at Rs. 2,000 Crore. In the last 5 years, the number of shareholders in Rama have increased from mere 4500 to over 70,000 thus creating a broad base and validating the valuation.
2. BLS International
Investment made in 2021 at market cap valuation of Rs. 3000 Crore, current valuation is Rs. 9,500 Crore. BLS has a cash reserve of Rs. 700 Crore, and PAT of Rs. 250 crores. In last 2 years, BLS has seen institutional investments from Nomura Securities, Mr. Shankar Sharma, Sixteenth Street Asian Gems fund and many more credible names.
3. Polymatech Limited
Polymatech is India’s first Semi-Conductor manufacturer/assembly company. It is the first unlisted company that we invested in. SKG did a bulk deal in Feb 2023 @ Rs. 200 and the company has recently filed for an IPO @Rs. 720. The company has a PAT of 30% with 4x growth projected in next 3 years.
Investor Profile and expectations.
Investors in the SKG India Value Fund usually have a high-risk appetite with a firm belief in Indian Equities and the India Growth Story. We recommend that the investment horizon should be 3 years. Market sentiment can drive the valuations down but we are very confident on the companies that we invest in. We aim to give >20% annualised return over a 3 yearperiod, our past ROI has been much more than 20% but at SKG we believe in under promise and over deliver.
