Itmarkets PMS Talk Q: Focus on small and midcaps to create multibagers over time, Arpit Agarwal Investment Strategy

“We focus on companies that have the possibility of producing operating palleting cache flow (small cap) and free cache flow (middle and small caps),” says Arpit Agarwal, co-founder and CIO of Electrome Portfolio Managers.

In an interview with Etimarkets, Agarwal said: “We are believing in producing potential cash flow in a business rather than profitability in a profit/loss statement. We use the GARP (growth at a reasonable price) to identify and invest in our portfolio companies, “Edited Quotes:

Thanks for the time taking. The month of January 2025 was not good for the electrom winning portfolio, but the funds have given impressive returns by beating the benchmark by a wide margin in the last 1 year. Please take us by numbers.
From the beginning (23/11/2020) our TWRR return for the winning investment approach is 38% CAGR. Our 1-year return is 23.3% vs 9.7% for our benchmark BSE 500 Tri.

Proceeding in the benchmark is 18.2% and 13.6%, respectively. At risk adjusted ratio, our information ratio and sharp ratio on the overall portfolio are 1.91 and 2.17, respectively.

Please take us through an investment vision.

The main part of our philosophy is invested in long -term scalable and durable development, strong motes businesses, good corporate governance, strong implementation and financial disciplinary companies.

These companies should have products or services that can make them a leader in their respective areas. We focus on Bottoms Up Research and is the area and the benchmark is Ost.

We focus on companies that have the potential to create operating pairing cache flow (small cap) and free cash flow (middle and small caps).

Instead of profitability in a statement of profit/loss, we are the believers to generate potential cash flow in the business. We use the GARP (growth at reasonable price) to identify and invest in our portfolio companies

How do you choose shares for funds?
We choose the structure of our ownership on the electrom
Management excellent management clan
Business life and durability of business
Earning income growth
Bettion capital efficiency
Turnaround/ value incorrect values/ conflicting opportunities

There is a lot of chat around small and midcaps and yours have a small and midcap focused fund. What are your opinions?
We believe that if we can choose 20-25 great professional models that are the leader of their special products, services or geographical market and are companies that can scale their business that is not very capital and 3-5-5-5 Can generate cash flow from -5-5-5-5-5-5-5-5-5-5-5. The period with a rising standard can produce a strong equity return.

We are firm believers that RS can be multibaggers during the period, RS 2000 crore to Rs 5,000 crore. This journey needs to be patient because markets are always unstable and non-linear.

We started on an unstable note of 2025 and increased things between the difficulties of the trade war on the domestic front, the strong de Dollar Lar and the evaluation. What are your opinions?
Yes, 2025 has begun from trade wars and yes markets have seen the DEEP Rando improvement, equity markets are unstable by nature and non-linear, we believe that if anyone has a good portfolio of basic strong companies, this instability should be used. Increase one’s contact.

History always shows that when danger is on its highest return, it is always good for the future markets.

We believe that trade tariffs are more a means of negotiations and that the economy imported in the form of inflation in the medium term will be damaged. This is a more shorter nature in our view.

The Dollar Lir trade is always a history histor and we have seen this cycle in the past, the last one was 2018. We are not worried about the flow of cyclic emerging markets and strong de dollar.

Should investors worry about trade wars? What does history indicate?
We do not believe that trade wars will last a long time, this is a negotiation trick for the USA. U.S. as a result of long -term tariff tariffs There will be more inflation, which is harmful to the economy.

US Many of the imports in the labor cost are due to the arbitrage and cannot be produced locally on a sustainable basis.

The market decreases more than 10% – which queries are you getting from your customers?
Kovid Post Kovid has been very strong in equity markets, in the recent correction we are asking our customers to raise more money, however, surprisingly.

Is there a time for 2025 long -term investors to create a strong portfolio that can generate wealth during the period?
Yes, we are strong believers in great line greed and fear. Long -term market data shows that when the markets are strongly improved, investments during that time gives the investors access at the right level and the long -term returns are good. We have seen the post Great Financial Crisis 2008, Post Kovid was very good if you create a portfolio of good companies.

Which area is likely to be a limelight hog in 2025?
We are investors of the benchmark and sector. However, our Bottles approach shows that our ideas are in water space, capital goods, Auto toe and Auto toe affiliates and pharmaceuticals. We would like to repeat that we are Sector Ost Ost and allotment of the field is to pick up Bottoms-up stock.

Which sector investors should invested a profit or weight of the investors?
As we have said we do not take the views of the field. We are investors of Sector Ost.

(Disclaimer: The views given by recommendations, suggestions, opinions and experts are their own. This does not represent the views of the economic time)