Marcellus Investment Managers founder and Chief Investment Officer Saurabh Mukherjea told Mint that four weak years led the firm to broaden its holdings and adjust its portfolio management. Mint published the interview Thursday, Oct. 22.
Marcellus said its Consistent Compounders Portfolio returned 27% annually over the five years through Diwali 2021. Mukherjea told Mint it returned 2% over the next four years. The interview did not specify whether that figure was cumulative or annualized.
In its October update, Marcellus counted 21 stocks in the portfolio and said its five largest holdings made up more than 40% of assets. The firm said its largest positions now include health care, auto components and export-oriented manufacturing, as consumer, financial and IT-services companies account for less of the portfolio than before.
Mint reported that Marcellus trimmed its Trent holding after the share price rose faster than profits, while keeping a large position. Mukherjea also told the outlet that the firm built a position in CarTrade after the stock fell by half from its IPO price. He described the moves as part of a broader approach that includes rebalancing holdings and buying researched businesses after steep price declines.
Marcellus has linked the poor stretch for quality stocks partly to pandemic-era valuations it considered unsustainable. The firm said consumer spending and government capital expenditure supported other stocks after the pandemic. As a historical comparison, Marcellus points to December 2007 through January 2014, when it says Indian shares were flat while quality companies compounded at roughly 15% to 20% a year.
Mukherjea expects earnings per share to grow 10% to 11% annually over the next decade. He estimated the Nifty 50’s price-to-earnings ratio at about 18 and said annual index returns could be in the high single digits if that measure moves toward a long-term average of 15. He forecast returns of 15% to 20% for quality stocks in the coming years.
NSE Indices data, as reproduced by Downstox, showed a Nifty 50 P/E of 19.26 on Oct. 21. Mint did not specify the date or calculation method for Mukherjea’s estimate.
Marcellus said the portfolio generated more than 15% alpha versus its index over the prior eight months. The firm disclosed that regulators had not reviewed or approved its performance calculations.
