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'Investing is an art & has to be very flexible' - Sunil Singhania

| 11/7/2011 9:48 AM Monday

How did you enter the fund management industry?

I completed my CA with an all-India rank when I was 20 years old but had to wait for a year before I could start working because of the age factor. That was the time when you could do your CA along with a degree in commerce. I then practiced for about 5-6 years. In 1994, when the National Stock Exchange was being set up, a businessman who wanted to enter the broking business offered me an opportunity to join him. I had always been interested in balance sheets and stocks and therefore agreed immediately. I was the president of that company for about two and a half years and in 1997 I moved to institutional broking company as a director. I was with the company for almost six years and was looking both at research as well as sales.

While working there I came into contact with Reliance, which was one of our customers and in 2003 when the equity markets were very bad, I moved to Reliance Mutual Fund. The main driver for my move into asset management was my passion for balance-sheets and stocks. I had found auditing very boring though of course it did help build my foundations.

Were you investing then?

I had not been investing earlier because there was no money to do so. However I did start investing small amounts after I started earning a reasonable amount from my auditing work. I first invested in a Godrej company which, I think, was called Godrej Innovative Chemicals and my investment of Rs 500 instantly became Rs 5000. The markets were at a peak then and this was a good learning
experience, in the sense that it gave you knowledge about when to book profits and how to be careful.

However, information about the financials of any company was hard to come at that time and it was all very opaque. There was no internet then and you had to give a requisition to the stock exchange to get a photocopy of a company’s balancesheet which they would give after a week. Even the company results were published in obscure newspapers.

What is your investing philosophy?

In India we believe that there are opportunities for growth as well as for value. There are good growth oriented sectors which can grow very fast such as Pharma, Information Technology, Telecom and now Education, Retail. At the same time you have decent value oriented companies also. From our perspective as a fund house we believe that India offers a unique situation where entrepreneurship exists along with mature sectors. So you have to marry both growth and value. Having said that, we as a fund cannot buy stocks which are very expensive and so we try and find alternatives which work for us and can give a similar kind of an upside. For example, we are very positive about the consumption story in India.

However, some of the stocks are now trading at much higher valuations than at which we would like to invest in them. So we are marrying that by investing in similar faster growing companies like say pharma stocks. So our investment philosophy is to try and buy stocks which offer disproportionate or higher returns and grow faster than the economy. At the same time we don’t ignore mature companies which can also keep on doing well. Personally, I am more biased towards value-oriented stock picking.

 

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