investment thesis on racl geartech

Manufacturing from India for the world promises to be a decadal theme. We favour categories that are strategic to customers supply chains and which are more immune to dumping from China.

  • Rising geopolitical tensions between the West and China have prompted MNCs to strategically reevaluate their high dependence on China and seek alternative supply chains for derisking.
  • European manufacturing faces structural challenges (low-cost competitiveness, long lead times for environmental clearances).  Current macro challenges are driving higher outsourcing to players in low-cost destinations like India.
  • Manufacturing may not offer as high ROCEs as IT Services/Consumer.  However, they offer 15-20% growth with longevity at 18-20% ROCE.  When growth slows down, their ROCEs could further expand as useful life of plants is greater than life over which they are depreciated. 

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Investment thesis on Delhivery

We took an initial position of 3% in Delhivery, a logistics firm. 

  • Logistics is an industry with decadal tail winds. We believe the sector will grow 12%+ and leaders can grow at 15%+ for long periods of time.
  • Delhivery has a competitive edge and is investing to enhance the same.
  • It can be 20% ROE business at scale.
  • We are aligned with the thought process of the promoter / management team.
  • We are paying a price that is broadly reasonable.

What does Delhivery do?

Delhivery is India’s largest fully integrated third party logistics services provider with a nationwide network covering over 18,600 pin codes.  The company provides a wide range of logistics services

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Why are Gold prices rising

We are an Equity fund house.  We will not be buying Gold in portfolios. However,  I would like to share my understanding of why Gold prices are doing well and why they should continue to do well. 

Gold has no attraction to fundamental investors as it generates no cash flow.  However, Gold has served as a store of value.  Here is the empirical evidence.

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Investment thesis on Yasho Industries

In an earlier blog, read here, we discussed the importance of seeking Asymmetric outcomes. 

What are conditions under which one could find Asymmetric outcomes? One needs:

  • Large and growing market opportunity that creates opportunity for rapid profit growth at acceptable ROEs (18%+)
  • A promoter that will continue to invest for growth but not be imprudent with risk taking.  Is enhancing organization’s capabilities. 
  • Broadly acceptable entry valuations.
  • Patience – you need time to allow compounding to work and progress is seldom linear. 

We believe Yasho Industries fulfils all these conditions at present.

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Investment thesis on IndiaMART InterMESH

A key attribute of our firm’s culture is the focus on writing a detailed investment thesis on every position of interest.  Writing clears the cobwebs in our minds and allows us to get more specific feedback from peers we respect.  It also reduces the chances of errors. 


IndiaMART is a company we have owned since 2020.  We enclose a more detailed thesis that explains why we believe this company can provide Asymmetric outcomes this decade and why the trailing PE ratio, often used as a valuation proxy, provides an erroneous representation of IndiaMARTs true value. 

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Is it different this time?

Like most valuation-conscious investors at present, we too are grappling to deploy capital at acceptable valuations. In many new accounts opened since January 2023, we continue to hold 20%+ uninvested cash. While we are not accepting capital from new partners at present, if we did, we would be able to deploy only ~40% in Week 1, most of it in Large Caps.


Our uninvested cash prompted a partner to ask us recently whether we are missing “something”. Sentiment for India is very positive. There is a wall of FII money waiting to enter India. SIP flows continue to be strong. Hence can’t valuation multiples continue to climb higher? Is it different this time?
It is not different this time, just the behavioural cycle at play in Small caps and select sectors.

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