While trade uncertainties remain and can cloud one’s view, it helps to focus on what’s not changing – which includes our strong macros, the big push towards consumption, the key priorities towards domestic manufacturing in critical areas such as semiconductors. Structural opportunities are available where Government focus and intent are strong.
Earnings cuts for domestic focused companies have been front loaded – expect improvement from 2HFY26 as all the Government measures begin to deliver growth. Globally focused manufacturing businesses will continue to grapple with trade uncertainties until they get resolved in some manner and IT services continue to deal with disruptions from different directions.
Axis Flexicap Fund’s performance is coming back after a disappointing spell – it has moved up into 2nd quartile on a 1 yr basis.
Sachin – who took over management of this fund 2 years ago - believes the balance that he has brought into the portfolio by adding select industrials to what was a more consumption focused portfolio, is better aligned with earnings growth profiles across sectors and this should help sustain the performance improvement that we are beginning to see.
Axis Flexicap Fund does not take a top down view on capsize allocations. Sachin looks at individual businesses that have strong growth runways irrespective of cap size segment they belong to. The top 10 stocks in the portfolio which account for 46% of assets have some mid and small cap names as well, on this basis.
Quality and growth with strong corporate governance continue to be the overarching framework for stock selection. Sachin prefers businesses with clear differentiation – which he finds in platform companies, CDMO players, healthcare businesses.
Sachin continues to be cautious on FMCG despite the big push on consumption as volume growth of FMCG majors is not even tracking GDP growth. He sees lot more value in distribution disruptors in the consumption space.
His key positions in industrials are in the two big growth areas – defense and EMS.
Sachin acknowledges that the composition of his financials holdings could have been better served by including more non-lenders especially from the asset management ecosystem – that is under active consideration now.