Magadh Capital (PMS)

Funds Managed	Asset Class	License
Value for growth	Multicap	PMS
Future stars	Small & mid cap	PMS

About

Magadh Capital Advisors LLP is a Mumbai-based Portfolio Management Limited Liability Partnership Firm registered with SEBI (Securities and Exchange Board of India) as a Portfolio Manager while Magadh Capital Firm is registered with SEBI as a Category III Alternative Investment Fund. Based on fundamental equity research and behavioral finance, they aim for long term wealth creation for their investors by delivering healthy and consistent returns in the world-class funds that they run with a high level of integrity. In this pursuit, they intend to keep the interests of all stakeholders (investors, investment managers, employees, and third-party service providers) largely aligned with investors’ interests being the core focus of its business.

Key staff

Founder and CEO: Vipul Prasad

Vipul set up Magadh Capital in 2016. Earlier, he had worked for twelve years in equity research with many large and well-reputed investment banks (ten years with Morgan Stanley and before that, one year each with Motilal Oswal Securities and ABN AMRO) advising mutual funds, sovereign wealth funds, hedge funds, and PE funds on stock investments based on fundamental research in Indian metals and mining, cement and media sectors. Vipul holds a B.Tech (Mechanical Engineering) from Indian Institute of Technology, BHU, Varanasi, and an MBA (Finance, Strategy) from Indian Institute of Management, Kolkata.

Investment Analyst: Tejas Shigwan

Tejas has experience of more than 6 years in the financial services industry and has worked largely in Fund Management, Equity Advisory, Wealth Management, and Equity Analysis. He has worked with companies like Axis Securities ltd, Prabhudas Liladhar Ltd., and Kotak Securities. At Axis Securities, he assisted Fund manager, performed equity research, created model portfolio strategies, and reviewed and re-balanced client portfolios. Before Axis Securities ltd, he had worked with Prabhudas Liladhar in the Corporate wealth advisory department as Portfolio Advisor. 

 Tejas is an MBA from ICFAI University and holds a Bachelor’s degree in Commerce from Mumbai University.

Investment philosophy (for the firm)

Magadh Capital’s investment philosophy is centered around the belief that the best way to generate superior returns is to identify good companies with sustainable competitive advantages and buy them at fair prices. The company emphasizes protecting capital, conducting deep fundamental research, and using a probabilistic approach to limit the impact of mistakes.

Magadh Capital believes that every asset has a fair value range, and purchase price plays a big role in generating alpha. The company emphasizes the importance of a meaningful gap between fair value and stock price to navigate prolonged irrational market moves. In terms of risk, Magadh Capital recognizes that markets are inherently risky and only partially efficient, but also provides opportunities for mispricing in stocks. The company places a relentless focus on capital protection and diversification to optimize risk-reward.

Regarding stock selection, Magadh Capital focuses on fast-growing and/or mispriced companies led by good management with sustainable competitive advantages. The company emphasizes corporate governance as an important filter to use. Magadh Capital follows a mix of value and growth styles, with a focus on growth at a reasonable price and value with clear catalysts. The company is keen on contrarian opportunities but places a strong emphasis on timely identification and corrective action on mistakes.

Magadh Capital is not shy of taking cash calls based on macro views to avoid bear market traps and act aggressively if a mistake is spotted in the portfolio. The company follows an active management approach for tactical calls, which are identified based on fundamental research and potent near-term triggers. Magadh Capital believes that having a long-term horizon is crucial for reducing the element of luck in investments

Value for Growth

Value for Growth is an investment approach with the objective of helping investors create wealth over 2-4 years without taking undue risks. The approach aims to protect the capital from deep and prolonged bear markets, concentration risk, and extreme volatility while providing capital appreciation over the long term by spotting mispricing in equities and constructing a stock portfolio consisting of a mix of good stocks with high growth potential or above market growth and high predictability.

The investment approach is sector agnostic, multi-cap, and has Nifty 500 as the benchmark. The portfolio will always have at least 35% exposure to large-cap stocks. The approach focuses on buying good companies with sustainable competitive advantages or sustainably improving businesses at a fair price. The key markers for competitive advantages that are focused on are earnings growth and return ratios, and fundamental research is followed for stock selection.

Investors’ funds would primarily be invested in equity shares and equity-linked instruments issued by companies listed in India. Some part of the funds may be invested in money market funds, liquid funds, debt funds, or kept as cash in the bank. The basis of the selection of the type of security is to focus on fast-growing and/or mispriced companies led by good management. Leadership – existing or potential – in a sector or sub-sector, backed by sustainable competitive advantages, is another key indicator for good companies, and corporate governance is an important filter to use. The allocation of the portfolio across types of securities is as follows: at least 35% in large-cap equity and equity-linked instruments, up to a maximum of 65% in mid-cap and small-cap equity and equity-linked instruments, and generally not exceeding 10-15% in debt/money market funds/liquid funds/mutual funds/bank deposits, which will depend on the fund manager’s market call.

The Future Stars

The Future Stars investment approach aims to help investors create wealth over 3-5 years by delivering superior risk-adjusted returns. The portfolio is focused on small-cap and mid-cap companies, with at least 75% of the portfolio allocated to this space. The benchmark used is the Nifty Mid-Cap 100 index. The objective is to identify and buy companies that can deliver multifold gains in free cash flows, can get into sector leadership, and/or are positioned to gain disproportionately from industry tailwinds over the next 3-5 years.

The selection of securities is based on identifying fast-growing and/or mispriced companies led by good management, with existing or potential leadership in a sector or sub-sector backed by sustainable competitive advantages. Corporate governance is also an important filter.

Investors’ funds would primarily be invested in equity shares and equity-linked instruments issued by Indian companies, with some part of the funds invested in units of money market funds, liquid funds, debt funds, and/or some part kept as cash in bank. The allocation of the portfolio across types of securities is at least 75% for equity and equity-linked instruments (small-cap and mid-cap), up to 25% for equity and equity-linked instruments (large-cap), and will depend on the fund manager’s market call but generally should not exceed 10-15% for debt/money market funds/liquid funds/mutual funds/bank deposits.

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