Saurabh Mukherjea says his portfolio ready to climb walls of worry, backed by 3 factors

Time of India

23-05-2025

Amid market turbulence, Marcellus follows a straightforward yet confident strategy: invest in top-quality stocks, buy at the right valuations, and keep cash handy to seize opportunities as they arise.
Despite macroeconomic turbulence and global tariff tensions, Saurabh Mukherjea remains bullish on his Marcellus portfolios. Backed by valuation discipline, high-quality stocks, and ample cash reserves, his CCP strategy targets uncorrelated businesses with strong moats. As market growth slows, Mukherjea sees opportunity in select value plays and resilient earnings, trimming underperformers and holding cash for tactical entry points.
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1. Uncorrelated Winners in a Concentrated Core
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2. Quality Shines When Growth Slows
3. Valuations at Historic Lows
Cash Is King — Even for Kings of Capital
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With storm clouds gathering over India's macroeconomic horizon and the tariff wars, star investor Saurabh Mukherjea is standing firm, armed with a concentrated portfolio, valuation discipline, and a pile of dry powder wherever needed.'The macro-economic environment is going through a period of weakness,' Mukherjea warned, citing a confluence of domestic and global pressures. 'Rising household debt, weak capex, sluggish job creation, and slowing consumption demand' at home are being compounded by geopolitical uncertainty and tariff wars, which threaten to roil currency markets, inflation, and interest rates.But Mukherjea, who runs Marcellus PMS, believes his flagship Consistent Compounders Portfolio (CCP) is well-positioned to weather the turbulence—and possibly thrive in it. In a recent note to clients, he offered three distinct reasons why.At the heart of his defence strategy is a tightly focused portfolio packed with businesses that march to their own drumbeat, largely insulated from macro shocks.'Our largest allocations include companies whose fundamentals are relatively uncorrelated with the macro factors,' said Mukherjea. One of them: a hospital chain rapidly expanding overseas while optimising efficiency at home. Another: a pharma firm with monopolistic control over global API production for cough syrups and painkillers, and exclusive manufacturing rights for patented big pharma products.Mukherjea's second pillar is rooted in history. 'During periods when Nifty50's earnings growth is weak, companies with high quality of moats and capital allocation prudence outshine,' he noted.The backdrop tells the story. Between FY22 and FY25, the Nifty50 posted a robust 24% EPS CAGR—a tide that lifted all boats, regardless of quality. But Mukherjea insists the next phase will separate the contenders from the pretenders.''When the going gets tough, the tough get going' by using their superior competitive advantages to gain market shares,' he said, adding that the CCP portfolio is well-aligned to capture these gains in a more challenging environment.Perhaps the most striking statistic: the 1-year forward P/E multiple of the CCP portfolio is now at its lowest since inception, following a recalibration of its constituents in 2024.'This puts our portfolio at a 25%-30% discount to its six-year average,' said Mukherjea, positioning it as a compelling value play in an uncertain market.Mukherjea's financials-focussed Kings of Capital Portfolio (KCP) remains heavily weighted toward private banks and NBFCs, but he has tightened the screws, cutting exposure to names with inconsistent growth or low RoEs.'We still don't find value in capital market-linked stocks and haven't added back any since our exit in late Sep'24,' he said. The combination of slim pickings and a re-rating in quality lenders has left KCP holding about 10% in cash—a strategic war chest amid market dislocation.Mukherjea's Little Champs Portfolio (LCP) and Rising Giants Portfolio (RGP) are also adapting to the new reality—emphasising earnings resilience, valuation discipline, and elevated cash levels.'Good quality stocks do fall during periods of market slowdown,' Mukherjea acknowledged. Cash, he said, will 'give some mitigation against these falls' and allow selective entries into oversold quality names.'This could be both increasing the position in the existing stocks, which see unwarranted correction + getting into coverage stocks, but which we had not invested earlier due to want of a better entry price. We are keeping a close watch on the developments on a continuous basis to see if we need to adjust the cash positions,' the fund manager said.The portfolios have been pruned. In recent months, LCP exited Home First Finance, Everest Industries, and Credit Access Grameen, while adding Abbott India and Indegene. RGP exited the same three plus Astral, Tube Investments, and Poly Medicure, while inducting Control Print and Indegene.Mukherjea remains vigilant: 'We are keeping a close watch on the developments on a continuous basis to see if we need to adjust the cash positions.'In a market battered by crosswinds, Marcellus' approach is simple but bold: hold only the best, pay the right price, and be ready with cash when opportunity strikes.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)