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How betting big on small caps helped Ayush Mittal reap rich dividends


After becoming a full-time investor in 2008, Mittal did a lot of collaborative work on research forums, where he met seasoned investors. He ended up collaborating with a friend Donald Francis, who created, a research and discussion platform for investors.

“Post that, my brother Pratyush Mittal joined the family business after he did his chartered accountancy (CA). We then created and (blog),” says Ayush.

Apart from running, Ayush also manages a portfolio management service (PMS)-Mittal Analytics Private Limited. The PMS has assets under management of around 100 crore, and manages funds for close family and friends.

Ayush Mittal shared his portfolio details, investment strategy, love for small- and mid-cap stocks and his financial journey for the special Mint series Guru Portfolio. Edited excerpts:


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What brought you to the stock markets?

My dad started investing in the late 70s with very little capital. While studying CA, he was forced to join the family business. While at this, he realized that equities were a good way of deploying surplus funds. Initially, I wanted to do software engineering, but after class 12th, I knew that it would not be possible for me to crack the IIT exams. Thankfully, my dad pushed me into investing. In 2000-01, I started helping him by compiling quarterly results. I soon realized that companies posting good numbers ended up doing very well. That’s how I got interested in equities and why I am passionate about it. I did my CA in 2008, and post that entered the world of investing, full-time.

What was your initial investing strategy?

Honestly, even today, we do not have any specific strategy because we think investing is very dynamic. Every few years, you revisit the past and then decide that what you were doing was wrong or immature. So, you learn and evolve every three to five years. But largely, we try to focus on small and mid-sized companies, which are not known well or not discussed widely. We have hardly owned any company, that has more than 20,000 crore market capitalization in a meaningful manner. We focus on small companies, wherein we try to look at their balance sheet, fundamentals and undervaluation. So, we focus on companies that are trading cheaply despite its good business numbers, or have a unique product, and then you invest in the management capabilities.

Which was the first stock that let you down?

I took a hit with a small steel company called Vasavi Steel Industries. At that time, I was trying to work on the turnaround cases. I put in some decent allocation in this stock and it just went bankrupt. I later realized that I never bothered to read the notes to accounts. There were huge liabilities, but I was only focused on the change in numbers.

How do you zero in on a stock in mid-cap and small-cap spaces?

When you’re investing in this space, you have to look at hundreds of companies, and we have been a very diversified investor. So, diversification is a must in this space because you will make a lot of errors and have to do a lot of experimentation. So, if you will build a portfolio of 10 stocks, then maybe three-four will do very well, two-three will do nothing and two-three will go really bad, but a portfolio will do well on an overall basis.

Every time the quarterly results come, we are very busy and we try to go through almost all the results. We try to look for companies that have posted a good set of numbers and try to understand the reason for this and why they’re doing well financially. We use several screens to get alerts of companies on various filters. Besides, has been an excellent platform to have detailed discussions with the best minds in the field.

What is the number of stocks that you target in your portfolio?

At any time, we have more than 30-40 stocks, which form 60-70% of the portfolio. We also have a concept of having a long tail of ideas. So, at any point, in our family accounts, we will be holding more than 100 stocks. But many of those long tail of 50-60 ideas will be contributing a very small percentage to the portfolio. The investments in these stocks would be like having a ‘foot in the door’ strategy.

Tell us about

This site was created by my brother Pratyush. When he joined the family business in 2010, he saw that we were doing a lot of manual stuff, like sifting through a lot of data. So, he automated a lot of processes using Microsoft Excel. He kept improving it over the next couple of years. Then he put it in the cloud and made it public. Till date, we have not marketed it, but people just love it. We get around 40-50 million page views and over 2 million users on the platform in a month.

On, we have created algorithms with which you can define your requirements, such as companies where sales have grown 30% or profits have grown 30% year-on-year, but price to equity (PE) ratio is still less than 25.

So, users get in-depth data on profit and loss, balance sheet, ratings, annual reports and DHRP (draft red herring prospectus) of the past 10-12 years, and then they can create tools, set alerts and screeners around them.

Screener is free for more than 99% of the users, and a very small percentage who are very extensive users choose to pay.

You also manage a PMS.

We started the PMS three years back, in 2019. At that time, small-caps and mid-caps were quite beaten down by around 30-50% after a big run-up since the end of 2017. We have kept it limited to family and a few friends, who we are comfortable with. As of now, we are managing close to 100 crore in that PMS with 20-25 odd clients. We have one strategy called MAPL Value Investing Fund.

The AUM is apart from the personal family funds that we have.

Earlier, just the three of us—my father, brother and me—were taking spontaneous decisions. Today, we are able to do more in-depth work because of a great team. We have Yogansh Jeswani and Ayush Agarwal, who are very young and yet very passionate about equities.

However, I personally do not feel confident about scaling up the PMS. The small and mid-cap space is too volatile and risky and most people don’t have that risk profiling or orientation for it.

How are you currently invested in your personal portfolio?

We are hardcore equity people— around 80% of our net worth is in equities, in the small and mid-cap space.Then, 15% is in real estate, and 5% in miscellaneous investments such as jewellery. We use real estate as a diversification tool because we are so much into equities. So, dad had a plan to sell some of the equity and buy real estate during the boom times. That’s what we try to do once every 4-5 years.

Do you use large-cap as an instrument to maintain liquidity?

Not really, but we do pursue some of the PSUs (public sector undertakings). The logic is that these companies offer high dividend yield. We have PSUs such as NMDC, Indian Oil Corporation and GAIL in our portfolio for the sake of high dividend, and because these are safe bets. In case we need funds, these will come in handy.

How has your portfolio performed over the years?

We don’t measure our returns on a regular basis, but on a ballpark basis, we would have done more than 25-30% CAGR over the past 20 years.

What is the one strategy that has worked for your portfolio, and the one that did not?

It’s not that some specific strategy has worked or not worked. We have continued doing the same small- and mid-cap approach. Since the start, we have tried to look for new companies where something interesting is happening, and we have tried to be early in identifying those names. That’s the thing that has worked for us. We have failed when we have taken short-cuts and invested in companies without doing any homework.

Which stocks have contributed most to your portfolio?

Some of the star performers for us have been Shivalik Bimetal, Avanti Feeds, NGL Fine-Chem, Rossell India, Godawari Power & Ispat, Sandur Manganese & Iron Ores, Balkrishna Industries and Astral.

Are these names biggest in percentage gain terms as well?

Yes. Avanti was a very big winner, with returns of 100 times. Similarly, many of these other names have 10x returns or more. We got Avanti seven-eight years back. The recent winners have been Shivalik, NGL and Godawari Power.

Do you invest in international markets?

No. Covering listed companies in India itself takes too much time.

Back home, are you bullish on any of the sectors?

We do not do sectoral investing, but what has worked for us is export-oriented companies. India has an advantage, because over the years our currency has kept on falling, and companies have become more competitive with time. There is availability of cheap, skilled labour. Also, India is becoming a major manufacturing hub slowly and reforms are happening at a really good pace. Electric vehicle, pharma and agrochemical look interesting as a theme.

How many months of emergency fund do you provision for?

We don’t keep any emergency fund. We believe that equity in itself is so liquid that if a need arises, we can just sell some shares and get funds in three-four days. We also have LAS (loan against security) facility for each of our accounts, though we rarely use it. This helps us in managing emergency funds.

Were you able to go on a holiday in the past year?

We go on family vacations three or four times a year. We visited the northeast recently.

When do you plan to take a vacation next?

There is no plan, it happens suddenly whenever friends and family decide to take one.

One lifestyle change that you picked up during the lockdown?

I started doing a bit of walking and cycling during covid-19. Other thing we did during the lockdown was working from home, which I think will continue in one way or another.

What does wealth mean to you?

Wealth is freedom, by which you don’t have to work for money and, in a way, the money starts working for you.

How do you identify yourself as an investor?

I started by trying to be a value investor after reading the books of Benjamin Graham and Warren Buffett. I’ve been very flexible as we try to find small companies which are growing, have a unique product and niche. Plus, I try to identify the companies where there’s not too much of competition and have some superior profitability metrics and growth visibility. So, maybe today, I am more of a growth investor versus a value investor earlier.


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