The StepTrade Revolution Fund is designed to capitalize on the promising SME and Microcap sector, offering investors exposure to a diversified portfolio of high-growth potential companies. The Fund focuses on anchor investments in SME and Microcap IPOs, providing early-stage support to promising companies entering the public market. Additionally, the Fund invests in listed SME and Microcap companies, targeting those with market capitalizations upto INR 1,000 crore. Employing a rigorous investment strategy that prioritizes growth potential, competitive advantages, favorable valuations, and strong governance standards, the StepTrade Revolution Fund seeks to generate attractive returns for its investors
Investment Strategy
The Fund plans to invest at least 40% of its investable funds as an anchor investor in Indian SME AND MICROCAP IPOs and up to 60% as a QIB in Indian SME AND MICROCAP IPOs and listed Micro-Cap companies with a total market capitalization of up to Rs 1000 crore. The Investment Manager will identify these investments based on market opportunities.
Anchor Investments
The fund intends 40% of its capital as Anchor Investments in SME AND MICROCAP Initial Public Offerings (IPOs). This strategic to allocate up to 40% position provides early-stage support to promising SME AND MICROCAP entering the public market.
Qualified Institutional Buyers (QIB)
The fund aims to 60% of its investible funds as a Qualified Institutional Buyer (QIB). Qualified Institutional Buyer (QIB) or listed SME or Microcap invest up to 60% companies.
SME AND MICROCAP IPOs
A portion of the fund will be dedicated to participating as a QIB in SME and Microcap IPOs, offering growth-stage SME and Microcap access to institutional capital and support.
Listed SME and Microcap Companies
Investments will be made in listed SME and Microcap Companies, especially those with market capitalizations upto INR 1,000 crore. These investments target companies with growth potential and established market presence.
Investment Philosophy
An investment philosophy represents a set of guiding principles or beliefs that govern an individual or entity's approach to investing. It outlines the core values, strategies, and goals that influence investment decisions.
Industry/Sector Potential
- Invest in growing companies scalable over time
- Look for companies with pricing power and benign competitive landscape
- Avoid sectors vulnerable to regulation, high competitive intensity, technological changes, and short growth cycles
How can we help your business?
- Invest in companies with competitive advantages, delivering higher ROEs than peers
- Avoid companies with poor free cash flows and declining market share
How can we help your business?
- Invest in companies with managements with clear strategies on generating shareholder value over the long term
- Look for companies with prudent capital allocation, in line with minority shareholder interest
- Avoid companies with frequent equity dilutions, excess leverage, and unrelated investments
How can we help your business?
- Invest in companies offering a favourable risk-reward ratio
- Valuations are not the sole investment criteria
- Avoid value traps and short-term fads
We believe that investing in companies with strong industry/sector potential, robust business models, sound governance, and attractive valuations is the key to generating sustainable wealth over the long term.
Investment Process
Our investment process is a rigorous and disciplined approach to identifying and investing in companies with strong fundamentals and attractive valuations. We believe that this process is the key to generating sustainable wealth for our investors over the long term.
Internal Analysis
- Financial Analysis and Screeners: We use financial screeners to identify companies that meet our investment criteria. These criteria include financial factors such as profitability, growth, valuation, and quality of earnings.
- Corporate Governance Checks: We conduct corporate governance checks to ensure that the companies we invest in have good management and ethical practices. We also assess the quality of the company's board of directors and its alignment with shareholder interests.
- Checklist: We have a detailed checklist for each company that we analyze. This checklist covers factors such as industry analysis, management, competitive landscape, risk/monitoring, and profitability/valuations.
- Risk-Reward Evaluation: We evaluate the risk-reward profile of each company before making an investment decision. We consider both the potential upside and downside when making this assesSME and Microcapnt. We also use stress testing to assess the company's resilience to adverse events.
- Stock Pitches: Analysts make detailed stock pitches to the investment team. These pitches outline the analyst's findings and investment thesis. The pitches are subject to rigorous questioning and debate from the investment team.
- Meeting Notes: We keep detailed meeting notes of all of our interactions with companies and other industry participants. These notes help us to track developments over time and measure the accuracy of our estimates.
External Analysis
- Conferences and Analyst Meets: We attend conferences and analyst meets to learn about companies and industries. We also use these events to network with other investors and industry experts.
- Investor Presentations: We review investor presentations and update calls to better understand management capabilities and outlook. We also assess the quality of the company's interactions with the investment community.
- Management Interactions: We meet with management on a regular basis to learn more about their businesses and strategies. We also use these meetings to assess the management team's competence, integrity, and alignment with shareholder interests.
- Primary Visits Across Supply Chain: We visit companies and their suppliers to get a better understanding of their operations and competitive landscape. We also use these visits to assess the company's environmental, social, and governance (ESG) practices.
- Interactions with Industry Experts and Peers: We meet with industry experts and peers to learn about their views on the future of the industry. We also use these interactions to identify new investment opportunities.
After considering all of the above factors, the investment team makes an investment decision. We rank all stocks using five recommendations: strong buy,buy, hold, sell, and strong sell.
