“We continue to make suitable changes in the portfolio (particularly the Little Champs portfolio) to create more diversity (increasing the mix of domestic vs the historical heavy leaning towards the export-oriented franchises; reducing the historical high concentration of chemical-oriented companies in the portfolio) and bring the healthy earnings growth trajectory back in the portfolios,” Mukherjea said in a note to clients.
In its midcap-focused Rising Giants and smallcap-heavy Little Champs funds, Marcellus has added two new stocks.
Go Digit General Insurance
Mukherjea said one thing that stands out in Digit’s numbers is its underwriting ability.
“Within 6-7 years of operations, it has been able to achieve a golden combination of scale + solid underwriting outcomes. Operations are leaner despite running a higher share of retail business which is an opex incentive and lower scale. Digit is currently at 6% in motor insurance and its overall market share in the non-life insurance sector is low at ~2.7%. In this context for Digit to grow at 1.5-1.8x industry growth is plausible, when overall market share is just 2.7%,” he said.
Shares of the newly listed firm have risen by about 2% in the last 3 months.Jash Engineering
Jash Engineering, which manufactures water flow control equipment, including sluice gates, valves, screens, and filters, has seen its revenues grow at a 34% CAGR over the last five years.Jash has a strong reputation and is a pre-qualified vendor for most municipalities, as well as other government bodies, including the Nuclear Power Corporation, Marcellus stated.
The stock is up around 43% so far in the year.
Stock Exits
Marcellus has exited RHI Magnesita from both the mid and small-cap funds. Additionally, the mid-cap fund has also seen the exit of SKF India and Ratnamani Metals & Tubes, while Prudent Corporate Advisory Services and Tega Industries have been removed from Little Champs.