Nippon India Vision Large & Midcap Fund has posted top quartile performance on a 3 yr basis and 60th percentile on 1 yr basis.
Aishwarya attributes this performance to strong focus on selecting stocks with operating profits growing at 15% or higher and which have distinctive competitive advantages that give them ability to win market share.
He prefers earnings visibility to taking contrarian bets– which may or may not work out. However, spotting earnings acceleration early on is a key aspect of his stock selection process.
Sectors he sees doing well in the coming years include data centres and their entire ecosystem and EMS – where growth potential is significant and stocks have now corrected meaningfully.
Aishwarya has considerable experience in the oil industry, having worked at a large oil refining & marketing PSU before coming into the fund management industry. His base case is that oil price hike is temporary as the world has surplus oil capacity and some large LNG facilities are coming on stream this year and the next.
The issue is of temporary disruption of supply from a region that accounts for 20% of global supply. Since it is in nobody’s interests to completely destroy oil infrastructure in the Middle East, he believes that damage may not be extensive and situation can normalize reasonably quickly.
In the Nippon India Vision Large & Midcap Fund, he has reduced exposure to oil marketing companies since they will see margin compression when oil prices spike up. He has increased exposure to oil refiners as refining margins go up while marketing margins shrink. He has also increased exposure to an oil exploration and production company.
On AI disruption fears that are impacting IT services, Aishwarya says he is significantly underweight the sector and will likely remain that way until more clarity emerges on actual impact.
Recent action in the portfolio includes taking profits in auto sector, adding into EMS in this correction, adding back hospitals in this correction which were exited pre correction and added plastic pipes companies as volumes and prices are turning up.
He believes industrials will now start picking up gradually – he is turning from negative to neutral to selectively positive.
He continues to be bullish on consumption as tailwinds that started with income tax and GST cuts will continue with the forthcoming implementation of the 8th Pay Commission recommendations.
He continues to remain overweight defense as Government continues to ramp up defense spending in a world full of wars and conflicts.